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

Key Insights:

• Sonnet to merge with Rorschach I LLC to form Hyperliquid Strategies Inc
  
• Combined entity will hold $583M in HYPE and $305M in cash
  
• HSI to become the largest U.S.-listed firm with HYPE in its treasury

Sonnet BioTherapeutics has signed a definitive agreement to merge with Rorschach I LLC, forming Hyperliquid Strategies Inc. The $888 million transaction will create a public crypto treasury company holding the HYPE token. Upon closing, the company expects to trade on Nasdaq under a new ticker symbol.

Strategic Shift Toward Digital Asset Holdings

The transaction includes $583 million in HYPE tokens and $305 million in committed cash investment. The combined reserves will position Hyperliquid Strategies Inc (HSI) as the largest U.S.-listed holder of the Hyperliquid Layer-1 blockchain token. According to Sonnet’s SEC filing, the valuation is based on HYPE’s spot price prior to the agreement.

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.