Sonnet, Rorschach to Merge in $888M HYPE Crypto Treasury Deal

Atlas Merchant Capital, Paradigm Operations LP, and other strategic backers are providing sponsorship and capital. Prominent investors such as Galaxy Digital, Pantera Capital, and D1 Capital are also participating in the deal. Rorschach I LLC was specifically created to execute this strategic combination and enable treasury management with digital assets.

Sonnet will become a wholly owned subsidiary of HSI and continue developing key assets such as SON-1010. It will also explore divestitures of non-core assets as part of the new treasury strategy. The transaction is subject to shareholder approval and customary regulatory closing conditions.

Post-Merger Operations and Shareholder Impact

At completion, Bob Diamond will serve as Chairman and David Schamis will become CEO of the new entity. The board will include Eric Rosengren, former Boston Fed President, and two current Sonnet independent directors. HSI also plans to appoint a new Chief Financial Officer to oversee treasury operations.

The deal includes a private placement of $5.5 million in preferred stock and warrants, closing on July 14, 2025. Convertible notes worth $2 million sold in June will convert into this offering. Net proceeds will fund biotech operations and business combination expenses.

After closing, existing Rorschach and new investors will hold about 98.8% of HSI, with Sonnet shareholders holding 1.2%. Lucid Capital Markets has provided a fairness opinion, and Chardan is serving as the sole placement agent. Legal counsel includes Greenberg Traurig for Rorschach and Lowenstein Sandler for Sonnet.