DeFi Development Corp Plans $1 Billion Solana Investment, Shares Rise 12%

DeFi Development Corp, formerly known as Janover, has announced its intention to raise over $1 billion in capital to invest in Solana, the sixth-largest cryptocurrency by market capitalization. The Nasdaq-listed firm, which previously operated as a real estate financing platform connecting commercial property lenders and buyers, filed a Form S-3 registration statement with the US Securities and Exchange Commission (SEC) on April 25, outlining its plans.

The funds raised will be used for general corporate purposes, including the acquisition of Solana (SOL) tokens. The filing notes that while Solana does not pay interest, staking rewards can be earned. The company acknowledges that the return on investment from the net proceeds of the offering will depend on the appreciation of Solana's value following their purchases. However, the company also warns that fluctuations in Solana’s price could result in the tokens being converted into cash at a value substantially below the net proceeds raised.

This strategic shift comes after a team of former Kraken exchange executives acquired 728,632 shares of Janover's common stock on April 7. Joseph Onorati, the former chief strategy officer at Kraken, has been appointed as the chairman and CEO of DeFi Development Corp. The company has adopted a Solana treasury reserve, applying a proven public-market treasury model to an asset that is earlier in its lifecycle and structurally reflexive compared to Bitcoin.

The firm’s new Solana investment treasury has been compared to Michael Saylor’s strategy, which has amassed over 538,200 Bitcoin (BTC), making it the world’s largest corporate Bitcoin holder. The board of directors approved the company’s Solana-focused treasury policy on April 4, authorizing long-term accumulation and the launch of Solana validators to enable the staking of its treasury asset. Parker White, the firm’s chief investment officer and former engineering director at Kraken exchange, already runs a Solana validator with $75 million in delegated stake.

Despite the potential benefits, the firm remains cautious about regulatory concerns. The filing highlights that the company may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect its business, financial condition, and results of operations. Unclear regulations around digital assets could impact the price of Solana and, consequently, the market price of the company’s common stock. The potential reclassification of Solana as a security is a particular concern, as it could lead to the firm being classified as an investment company under the Investment Company Act of 1940.

Despite these concerns, the firm’s share price has shown positive movement due to its Solana acquisitions. When DeFi Development Corp added $11.5 million worth of Solana tokens to its treasury on April 22, its shares rose by over 12%. Chris Chung, founder of the Solana-based swap platform Titan, commented that the decision by Janover to add SOL to its treasury is groundbreaking and expects many other businesses to follow suit as crypto becomes increasingly adopted by traditional finance.