Faraday Future Intelligent Electric Inc. announced plans to spin off its crypto division into CXC10, a new independently listed Web3 company, which has allocated $10 million in crypto assets.

The Event in Detail

Faraday Future Intelligent Electric Inc. (FFAI) has officially announced its plan to spin off its cryptocurrency flywheel into a new, independently listed Web3 company named CXC10. The FFAI Board of Directors has approved this strategic move.

CXC10 is positioned to become a leading Web3 listed company on the U.S. stock market. It will operate and finance independently, though it is targeted to be initially controlled by FFAI, establishing a dual-listed company structure.

The C10 Treasury, an integral part of this new entity, has already completed approximately $10 million in crypto asset allocation. This allocation has demonstrated positive mark-to-market performance and has reportedly outperformed the C10 Index.

Additional details regarding the spin-off are anticipated to be disclosed at Faraday Future's annual stockholders' meeting on September 19.

Financial Mechanics and Strategy

The C10 Treasury implements an "80% passive + 20% active" allocation strategy. The 80% passive component is systematically allocated in accordance with the C10 Index, which tracks the top ten cryptocurrencies by free-float market capitalization and undergoes periodic rebalancing.

The remaining 20% constitutes an actively managed component, designed to capitalize on event-driven opportunities, correlation trades, hedging, and liquidity management. This actively managed portion has delivered unrealized gains that have surpassed the performance of the C10 Index.

The spin-off is a strategic maneuver addressing two key concerns from stockholders: primarily, CXC10 will raise capital independently, thereby preventing the dilution of FFAI stock. Secondarily, this separation enables both the FFAI team to concentrate on its core electric vehicle business, particularly the delivery of FF and FX products, and the CXC10 team to focus exclusively on its Web3 initiatives.

This dual-engine growth system is intended to maximize stockholder value by allowing each entity to access capital markets appropriate to its distinct business model while maintaining synergistic relationships.

Market Implications and Broader Context

Faraday Future's establishment of CXC10 as an independent Web3 public company could establish a significant precedent for other traditional corporations exploring similar Web3 integrations or spin-offs. This development signals an evolving trend of institutional interest and the flow of capital into the broader crypto ecosystem.

The future performance of CXC10 as a newly listed Web3 entity is expected to influence subsequent initial public offerings (IPOs) within the Web3 sector and shape the perception of Web3 in traditional finance. This strategic move highlights a growing conviction among public companies that Web3 initiatives can function as distinct, value-generating business units.

The company is also actively recruiting top blockchain and Web3 talent, further demonstrating its commitment to expanding its Web3 capabilities and potentially attracting additional partners within the sector. This approach offers a parallel to companies that have integrated digital assets into their corporate treasuries, yet it introduces a distinct model through a dedicated, independently listed subsidiary for comprehensive crypto asset management. This separation allows for specialized focus and capital deployment within the Web3 landscape.