First up, the background, first posted May 7, 2022:
"As the SEC Cracks Down on Shady SPACs, CIA Officials Get In on the Action"
From The Intercept, May 5:
Leaders of In-Q-Tel, a CIA-backed venture fund, and retired CIA officials are getting in on the latest stock market trend.
Top leadership for Central Intelligence Agency’s venture capital arm, In-Q-Tel, have quietly launched a separate “blank check” fund that stands to fuel astronomical fortunes for former intelligence officials.
In-Q-Tel, which receives funding and directions from the CIA, was founded by the CIA in the late ’90s to spur private sector innovation with the goal of bringing the latest technology to market to fuel America’s covert national security operations. Now, its chief executive and president are taking advantage of the latest stock market fad to create financial windfall for themselves and a small set of former national security officials.
In November, a “special purpose acquisition company,” or SPAC, called Chain Bridge I filed for an initial public offering designed to raise $200 million. The fund, which had little fanfare, was formed by In-Q-Tel’s senior leadership along with a team of retired CIA leaders and technology investors.
SPACs, which have surged in popularity over the last two years, are referred to as “blank check” funds because they allow investors to pool capital in a publicly traded fund, with no underlying assets or business model, for the sole purpose of acquiring a private company. In response to the wave of inadequate disclosure and fraud in the market, the SEC has proposed new rules governing SPACs.
Chain Bridge I is still seeking to acquire a defense contractor that is, according to the firm’s annual report, “poised to benefit” from government spending on national security.
“This is a case of the revolving door on steroids — not just using connections with former government colleagues on behalf of corporate interests, but setting up an entirely new corporate entity that trades on those ties to earn them a huge potential payoff,” said William Hartung, a senior research fellow at the Quincy Institute.
The blank check fund is clear that it hopes to raise hundreds of millions of dollars by leveraging its relationships with government decision-makers. The SPAC’s 10-K disclosure states that it will seek to acquire a national security technology company that is “poised to benefit from billions of dollars in defense spending in the near-term.”
“We intend to identify businesses with emerging technologies that will advance the DoD’s strategy as well as the broader interests of the United States in a period of increasing geopolitical instability,” the disclosure further notes, referencing the Department of Defense.
Chain Bridge I is the creation of the Chain Bridge Group, a Cayman Islands-registered investment fund led by In-Q-Tel CEO Christopher Darby, In-Q-Tel President Stephen Bowsher, and Michael Rolnick, a technology investor who previously advised billionaire Michael Bloomberg’s presidential campaign. Darby, while helming the CIA’s venture capital fund, serves as chair of the SPAC and its largest investor. Darby’s Chain Bridge Group, with a 16.21 percent stake, is the largest shareholder of Chain Bridge I.
The SPAC board features former intelligence officials, such as Michael Morell, the former deputy director of the CIA; Jeremy Bash, a former chief of staff to the director of the CIA; and Alex Younger, a retired career British intelligence officer. Other board members include Edward Sanderson Jr., a former chair of SAIC, a major intelligence contractor, and Nathaniel Fick, general manager of the intelligence contractor Elastic and the former head of the Center for a New American Security, the defense think tank in Washington, D.C....
....MUCH MORE
And the followup from The Messenger, September 25:A CIA-Linked Investment Fund Is Falling Apart, Leaving a Trail of Questions
Investors demanded money back after Chain Bridge missed a deadline to complete a deal — and potential payday for the executives behind it
When Christopher Darby launched an investment fund with ties to the CIA in 2021, he aimed to acquire a company steeped in national security technology. Investors poured $230 million into the publicly-traded fund, called Chain Bridge I.
Darby, the fund’s chairman, also ran the successful venture capital firm In-Q-Tel, which invests in startups on behalf of the U.S. intelligence community. Darby and his Chain Bridge colleagues, many with backgrounds at the Central Intelligence Agency and other intelligence entities, saw their new fund as a vehicle to bolster America’s security interests.
But there was another potential benefit as well. The right investment could have yielded private ownership of a lucrative company critical to U.S. interests — and a potentially rich government contract for use of its technology or services. Corporate filings suggest Chain Bridge would have carried big financial benefits for its top officers, a potential payday not available through In-Q-Tel.In a prospectus, Chain Bridge said that it intended to acquire “a technology company that will advance U.S. national security and intelligence interests.” Civilian technologies, it added “have become both projections of global power and the foundation of robust national security strategy.”
Meanwhile, early investors have been selling their stakes and taking their money back. A wave of nearly $200 million in redemptions has left the fund with little capital for a deal — and less than $40,000 in cash for operating costs, according to securities filings....
But nearly two years later, that grand plan is starting to look like a quagmire.
Chain Bridge was launched at the tail end of the SPAC craze, when deals involving the special purpose acquisition companies were drying up. It missed a May 15 deadline to get a deal done. Trading in its warrants — securities that allow the owner to purchase fund shares at a set price — was suspended by Nasdaq on Aug. 23 after their total value fell below the exchange’s minimum capitalization limit of $1 million. The fund failed to submit a plan to get things back on track, and the warrants were delisted earlier this month, securities filings show. (Two of the fund’s other securities continue to trade.)
