United States securities and exchange commission logo
November 8, 2022
Lewis Silberman
Co-Chief Executive Officer
GSR II Meteora Acquisition Corp.
840 Park Drive East
Boca Raton, Florida 33432
Re: GSR II Meteora
Acquisition Corp.
Preliminary Proxy
Statement on Schedule 14A
Filed October 5,
2022
File No. 001-41305
Dear Lewis Silberman:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Proxy Statement filed on October 5, 2022
General
1. We note your disclosure
that Bitcoin Depot operates cash-to-cryptocurrency BTMs.
Please clarify if your
BTMs offer only the one-way exchange of cash-to-cryptocurrency
and, to the extent
applicable, please provide detailed disclosure regarding any
additional exchange
services that your BTMs offer.
Certain Defined Terms, page 3
2. Please clarify the
distinction, if any, in the terms you use to refer to crypto assets, and add
the terms
"cryptocurrency" and "digital assets" to your list of defined terms on page 2.
If
there is no
distinction, please revise the filing to use a single defined term throughout.
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 2 8, 2022 Page 2
FirstName LastName
Questions and Answers About the Proposals for PubCo Stockholders
Q: What equity stake will current PubCo stockholders, the Sponsor and BT Assets
hold in
PubCo..., page 19
3. Please revise the "fully diluted" share ownership table on page 20 to
include all potential
sources of dilution that shareholders who elect not to redeem their
shares may experience
in connection with the business combination. Provide disclosure of the
impact of each
significant source of dilution, including the impact of any PIPE
investments and any
Incentive Issuances.
Q: What interests do the current officers and directors of PubCo have in the
business
combination?, page 24
4. Please revise to quantify the aggregate dollar amount and describe the
nature of what the
Sponsor and its affiliates have at risk that depends on completion of
a business
combination. Include the current value of securities held, loans
extended, fees due, and
out-of-pocket expenses for which the Sponsor and its affiliates are
awaiting
reimbursement. Provide similar disclosure for the company's officers
and directors, if
appropriate.
Q: Do I have redemption rights?, page 25
5. We note that the Sponsor and PubCo's directors and officers have
agreed to waive their
redemption rights. Please describe any consideration provided in
exchange for this
agreement.
Summary of the Proxy Statement
Regulatory Matters, page 36
6. Please discuss, including quantitatively if possible, how the
regulatory environment in
which you operate has driven operating costs and strategy with respect
to where you
operate and what crypto assets you support through your BTMs and
BDCheckout.
Similarly revise the applicable risk factors and your Business
section.
Board of Directors of PubCo Following the Business Combination, page 41
7. We note your statement that "PubCo expects to be a controlled company
within the
meaning of the Nasdaq corporate governance standards, and may elect
not to comply with
certain Nasdaq corporate governance requirements." Please confirm
whether you intend to
opt out of any corporate governance requirements under the Nasdaq
Market Rules as a
result of being a "controlled company".
Summary Unaudited Pro Forma Condensed Combined Financial Information , page 50
8. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
Lewis Silberman
GSR II Meteora Acquisition Corp.
November 8, 2022
Page 3
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
Risk Factors, page 54
9. We note that you include various references to insurance coverage in
your risk factors
section. Under an appropriately captioned heading, please disclose the
types of insurance
coverage you carry, including any insurance that you or the
third-party custodians with
which you transact carry covering crypto assets held on your behalf or
on behalf of
customers. Please disclose the amount of coverage, term, termination
provisions, renewal
options and limitations on coverage. To the extent you or the
third-party custodians with
which you transact do not carry insurance covering crypto assets,
please revise your
disclosure to so clarify and expand your risk factor disclosure as
appropriate. In addition,
we note your disclosure on page 56 that you may self-insure against
certain business risks
and expenses where you believe you can adequately self-insure against
the anticipated
exposure and risk or where insurance is either not available or deemed
not cost-effective.
Please expand your disclosure to describe the risks that you may
self-insure against.
Major bank failure or sustained financial market illiquidity..., page 69
10. We note your disclosure under this heading that a "substantial portion
of [y]our cash, cash
equivalents and interest-bearing deposits are either held at banks
that are not subject to
insurance protection against loss or exceed the deposit insurance
limit." Please revise to
quantify the amount of your cash, cash equivalents and
interest-bearing deposits that you
are referring to.
We depend on major mobile operating systems and third-party platforms..., page
72
11. We note your disclosure under this heading that you rely on
third-party platforms for the
distribution of certain products and services and that "these
distribution platforms often
contain restrictions related to digital assets that are uncertain,
broadly construed, and can
limit the nature and scope of services that can be offered." Please
expand your disclosure
to explain the restrictions to which you are referring which could
result in you no longer
being able to offer your products and services through such platforms.
Risks Related to Government Regulation and Privacy Matters, page 73
12. We note that you are currently licensed to operate as a money
transmitter in nine U.S.
states, Puerto Rico and the District of Columbia and that you operate in
47 states. Please
identify the nine states in which you are currently licensed to operate
as a money
transmitter, and identify any states in which you have a money
transmitter license
FirstName LastNameLewis Silberman
application pending. Please also confirm whether you believe you are not
required to
Comapany NameGSR
obtain a money II Meteora Acquisition
transmitter Corp.
license in the other jurisdictions in which
you operate, or
confirm what actions
November 8, 2022 Page 3 you are taking to obtain any required licenses.
FirstName LastName
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 4 8, 2022 Page 4
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The status of various cryptocurrencies as a "security" is subject to a high
degree of uncertainty...,
page 81
13. We note your statements that "the legal test for determining whether
any given digital
asset is a security is a highly complex, fact-driven analysis that may
evolve over time,"
that "[t]he SEC generally does not provide advance guidance" and that
"it is difficult to
predict the direction or timing of any evolution in regulations."
Please remove
these statements as the legal tests are well-established by U.S.
Supreme Court case law
and SEC staff have issued reports, orders, and statements that provide
guidance on when a
crypto asset may be a security for purposes of the U.S. federal
securities laws.
Many of our kiosks and key components to these kiosks are procured from a
single or limited
number of suppliers..., page 82
14. We note your disclosure that you have a significant vendor from which
you purchase
substantially all of your kiosks and from which you license related
technology and that the
term of the agreement with this vendor continues for as long as you
retain ownership or
use of the kiosks you purchased, unless otherwise terminated due to a
breach. Please
revise to clarify what would constitute a breach.
Risks Related to Management and Employees, page 83
15. Please revise the conflicts of interest discussion so that it
highlights all material interests
in the transaction held by the sponsor and the company s officers
and directors. This could
include fiduciary or contractual obligations to other entities as well
as any interest in, or
affiliation with, the target company. In addition, please clarify how
the board considered
those conflicts in negotiating and recommending the business
combination, and include
this discussion in the section "Proposal No. 1 - The Business
Combination Proposal -
PubCo's Board of Directors' Reasons for the Approval of the Business
Combination" on
page 146.
16. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
Risks Related to GSRM and the Business Combination, page 97
17. Please specifically highlight the risk that the Sponsor will benefit
from the completion of a
business combination and may be incentivized to complete an
acquisition of a less
favorable target company or on terms less favorable to shareholders
rather than liquidate.
18. Please expand your discussion of the material risks to public warrant
holders to include
those arising from differences between private and public warrants.
Clarify whether recent
common stock trading prices exceed the threshold that would allow the
company to
redeem public warrants. Clearly explain the steps, if any, the company
will take notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 5 8, 2022 Page 5
FirstName LastName
19. Please highlight material differences in the terms and price of
securities issued at the time
of the IPO as compared to private placements contemplated at the time
of the business
combination. Disclose if the SPAC s sponsors, directors, officers or
their affiliates will
participate in the private placement.
Business of Bitcoin Depot, page 220
20. We note your disclosure that your BDCheckout locations are sourced and
connected
through your relationship with a leading payment processing provider.
Please revise your
disclosure to identify the payment processing provider to which you
refer.
Our Products, page 222
21. We note your statement on page 223 that "based on historical
enforcement actions and
existing regulations and laws, we believe that our activities and the
cryptocurrencies that
we sell (Bitcoin, Litecoin and Ethereum) do not subject us to SEC
regulation, and thus we
believe we are not required to be registered with the SEC to sell such
cryptocurrencies at
our BTMs and via BDCheckout. Please revise to disclose the policies
and procedures you
have in place which allow you have made this determination and advise
us as to whether
(and, if so, how) you have evaluated the characterization of Ether in
light of the recent
Ethereum merge. In addition, please revise to clarify, if accurate,
that such processes are
risk-based judgments made by the company and not a legal standard or
determination
binding on any regulatory body or court.
22. Please provide a complete description of typical purchase and sale
transactions at a
Bitcoin Depot BTM. In particular, please:
At each stage of the transaction, identify who has custody of any
funds going out to
fund a transaction;
At each stage of the transaction, identify who has custody of any
asset, digital or
otherwise, that goes back to a customer s brokerage account;
Please clarify whether, in a user purchase transaction, the crypto
assets distributed to
a BTM user are held in a Bitcoin Depot wallet or are purchased on
an exchange or
from a liquidity provider at the time of order;
Please clarify whether, in a user sale transaction, the crypto
assets purchased from a
BTM user are held in a Bitcoin Depot wallet or are immediately
offered for sale on
an exchange or to a liquidity provider; and
Clarify the extent of regulatory approvals to perform these tasks.
23. Please revise this section to discuss in greater detail your custodial
practices for crypto
assets. To provide more clarity, please address the items below:
briefly discuss how you determine what portion of the crypto
assets are held in hot
wallets and cold wallets, respectively;
disclose the geographic location where the crypto assets are held
in cold wallets and
how the private keys are located;
identify the person(s) that have access to the digital assets and
whether any persons
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 6 8, 2022 Page 6
FirstName LastName
(e.g., auditors, etc.) are responsible for verifying the
existence thereof. Also clarify
whether any insurance providers have inspection rights associated
with the digital
assets held in storage;
identify the person(s) that have the authority to release the
proceeds from your
wallets; and
briefly discuss how the existence, exclusive ownership and
software functionality of
private cryptocurrency keys and other ownership records are
validated by the relevant
parties.
24. We note your disclosure that kiosk users can "create and use a Bitcoin
Depot-branded
wallet (un-hosted and non-custodial)." Please fully describe the
nature of Bitcoin Depot-
branded wallets, including the procedure by which a user creates the
wallet, what app or
other means through which users can access the wallet, how private
keys are transmitted
to users, and whether Bitcoin Depot is liable or responsible for any
losses users may
experience.
25. We note that your kiosks are manufactured and supplied by ATM
companies, including
Genmega. Please provide a breakdown of your kiosks by manufacturer,
and confirm
whether your relationship with any manufacturer is material.
26. Please provide a description of the differences between a BDCheckout
transaction and a
kiosk transaction, including any fees payable to third parties and a
comparison of the costs
and relative profitability of the two products.
27. We note your disclosure on page 223 that as of June 30, 2022, your
contracts with your
top 10 retail partners had a weighted average remaining life of 2.8
years. Please identify
your top 10 retail partners, the total revenues derived from each
partner and the remaining
life for each of these contracts. In addition, we note your disclosure
throughout that your
BDCheckout product is available at 8,000 "well-known retail
locations." Please revise
your disclosure to clarify what you mean by "well-known retail
locations."
Our Competitive Strengths, page 225
28. We note your statement on page 226 that you "have invested in and
maintain robust,
multi-layer compliance procedures to evaluate potential users, open
user accounts and
monitor transactions at [y]our BTMs." Please revise to describe your
AML/KYC
procedures, including how users are verified at the kiosk, and
describe any challenges
with kiosk-based verification given your use of and connectivity with
non-hosted, non-
custodial wallets, which are more anonymous and harder to verify.
29. We note your disclosure that you maintain a relatively low balance of
crypto assets at any
given time from which you satisfy your users' demand from kiosk or
BDCheckout
transactions and that as you send users crypto assets, you will
immediately replenish your
crypto asset balance. Please revise to clarify what you mean by a
"relatively low balance
of crypto assets at any given time" and to clarify how long you hold
the crypto assets in
which you transact.
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 7 8, 2022 Page 7
FirstName LastName
30. We note your disclosure that your compliance team routinely rejects
user applicants that
fail authentication requirements, and bans users who violate the terms
of service from
transacting at our kiosks and via BDCheckout. Please revise to
quantify how frequently
your compliance team rejects user applicants and bans users. In
addition, please revise to
disclose the "terms of service" to which you refer.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Bitcoin Depot, page 233
31. We note your disclosure that you use a sophisticated cryptocurrency
replenishment
process to reduce your exposure to volatility in cryptocurrency prices
and maintain a
relatively low balance of cryptocurrency at any given time. Please
tell us, and revise your
next amendment, to provide a clear and concise discussion of the
working capital
requirements needed to enter into the required buying and selling of
digital assets
inventories necessary to support the customer requested order
fulfillment activities
received through both the ATM and BDCheckpoint transactions.
32. In your reconciliation for 'Adjusted Gross Profit,' we noted that you
reconcile from
'Adjusted Gross Profit,' the Non-GAAP indicator, to 'Gross Profit,'
the GAAP measure.
This represents a prominence issue. Please revise your next amendment
to reconcile from
the GAAP measure to the Non-GAAP indicator. Refer to Question 102.10
in the SEC's
Non-GAAP Financial Measures Compliance & Disclosure Interpretations.
33. We note on page 151 Bitcoin's revenue assumptions reflect historical
actual average
performance of transaction volume in each deployed kiosk for the first
24 months. Please
revise your discussion of revenues to quantify and explain this
historic average monthly
performance per Bitcoin kiosk for each period presented to disclose
the trends that support
your current and future transaction volume.
34. We note your various disclosures regarding how you determine the
prices used in your
cryptocurrency transactions. Please revise to also disclose the
following:
How you determine your flat fees;
Whether the cryptocurrency prices include markups;
Whether pricing differs between the customer s use of a Bitcoin
Depot BTM or the
BDCheckout product;
Differences in the pricing components of trades for user purchase
versus user sales
transactions; and
How your markups differ between digital assets and your other
transactions.
35. If material, please revise to disclose the markups recognized in each
period presented, and
whether your markups are dependent upon the type of crypto asset
purchased or sold.
Our Business Model, page 233
36. Please disaggregate and quantify your transaction volume by year for
the periods
presented.
Lewis Silberman
GSR II Meteora Acquisition Corp.
November 8, 2022
Page 8
Key Factors Affecting Our Performance, page 234
37. We note your statement that your "business is dependent on the broader
use and adoption
of cryptocurrencies, which can to an extent be impacted by the spot
price of the
cryptocurrencies [you] sell (including Bitcoin, Litecoin, and
Ethereum)." Please confirm
whether you sell crypto assets other than Bitcoin, Litecoin and
Ethereum. Please also
quantify the transaction volume for each of the crypto assets in which
you transact for the
periods presented.
Key Business Metrics, page 235
38. To the extent available, please provide a discussion of a metric such
as average monthly
transaction volume per kiosk to provide a sense of per-kiosk
profitability, and provide a
discussion of trends.
Components of Results of Operations, page 237
39. Please revise to discuss the purchase activities of crypto assets for
each of the periods
presented by asset type and discuss the working capital required to
exercise these
activities.
Summary of Critical Accounting Policies, page 244
40. We note that your statement that "We determine the fair value of our
Bitcoin, Litecoin and
Ethereum on a nonrecurring basis in accordance with ASC 820, Fair
Value Measurement,
based on quoted (unadjusted) prices on the Coinbase exchange, the
active exchange that
we have determined is our principal market (Level 1 inputs)." Please
confirm whether
Bitcoin Depot transacts with other exchanges, and whether you have any
formal
arrangements with Coinbase or any other exchanges, or any liquidity
providers such as
Cumberland DRW, including the material terms of such arrangements
regarding order
flow or other terms that could impact pricing for users.
Unaudited Interim Financial Statements of GSR II Meteora Acquisition Corp.
Notes to Financial Statements
Note 7. Redeemable
FirstName Class ASilberman
LastNameLewis Common Stock and Stockholders' Equity, page F-35
Comapany
41. NameGSR
Please II with
provide us Meteora
yourAcquisition Corp.
analysis under ASC 815-40 to support your
accounting
treatment
November forPage
8, 2022 the Private
8 Warrants as equity.
FirstName LastName
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 9 8, 2022 Page 9
FirstName LastName
Lux Vending, LL (DBA Bitcoin Depot) Consolidated Financial Statements
Consolidated Statements of Cash Flows For The Years Ended December 31, 2021 and
2020,
page F-43
42. We note you had purchases of services in digital assets of $2.4
million, $6.1 million, and
$3.5 million in 2022, 2021, and 2020, respectively. Please provide a
thorough description
of the nature, type, and substance of expenses paid to vendors through
the issuance of
digital assets.
Notes to Consolidated Financial Statements December 31, 2021 and 2020
Summary of Significant Accounting Policies
(e) Digital Assets, page F-46
43. We note your disclosure that you perform impairment testing on digital
assets on an
annual basis, or more frequently, when events or changes in
circumstances occur
indicating that it is more likely than not that the indefinite-lived
asset is impaired. Please
tell us, and revise your next amendment, to disclose in greater detail
the frequency of
impairment testing in the periods presented. If impairment testing was
done annually in
the periods presented, tell us how that impairment testing period is
appropriate given the
nature price changes in digital assets.
44. We note your disclosure that your digital assets are comprised
"primarily" of Bitcoin,
Litecoin, and Ethereum. Please revise your next amendment to disclose,
including
quantitatively, if you hold or transacted in any other digital assets
other than the three
listed in the periods presented.
45. Please reconsider the appropriateness of your statement that there is
no official guidance
for the accounting for digital assets. We observe that the FASB
codification is the source
of authoritative generally accepted accounting principles and that
there is codification
guidance whose scope applies to your transactions.
46. We note that you hold digital assets for two purposes: (1) to sell to
customers in exchange
for cash, and (2) for investment purposes. Please provide the
following:
Revenues and cost of revenues for digital assets held for sale to
customers in
exchange for cash and held for investment purposes; and
A rollforward of digital assets held for sale to customers in
exchange for cash and
held for investment purposes by each specific type of digital
asset (BTC, LTC, ETH)
in the periods presented.
47. Please tell us the accounting literature followed when making the
determination that the
indefinite-lived intangible assets would be recorded on your
consolidated balance sheet on
a first-in, first-out ("FIFO") basis. In addition, tell us any
alternative methodologies you
considered and why you believe FIFO is a more appropriate measurement
methodology.
48. We note your disclosure on page F-46 that you, "in limited cases,
allow customers to sell
these types of digital assets." Please clarify this disclosure,
specifically addressing if you
Lewis Silberman
FirstName LastNameLewis
GSR II Meteora AcquisitionSilberman
Corp.
Comapany 8,
November NameGSR
2022 II Meteora Acquisition Corp.
November
Page 10 8, 2022 Page 10
FirstName LastName
purchase digital assets from customers through your ATMs or through
the BDCheckout
product.
(i) Revenue Recognition, page F-48
49. We note you launched BDCheckout in the second quarter of 2022 and have
8,395
locations at June 30, 2022. Please revise your next amendment to
specifically discuss
your revenue recognition policy for BDCheckout revenues.
50. We note you acquired BitAccess in July 2021. Please revise your next
amendment to
describe in greater detail your revenue recognition policies for
BitAccess hardware and
software revenues.
51. Please tell us what constitutes the 'OTC and other revenue' in the
periods presented and
your revenue recognition policy for these revenues.
52. We note your disclosure on pages F-49 and F-77 that revenues from
software services is
settled in digital assets. Please tell us the following for these
transactions:
when ownership or control is determined to have transferred;
how the price of the digital asset is determined;
the types of digital assets received in these transactions;
how the Company uses these digital assets once received;
use or reliance on third parties at any stage of the process; and
whether the Company acts as a custodian or holds any digital
assets off balance sheet
at any point in the process.
53. We note your disclosures regarding the Company's policy for providing
a mark-up.
Please tell us, and revise your amendment, to discuss the following:
Disclose the mark-up revenue recognized in the periods presented;
Tell us if the mark-up is dependent on the type of digital asset
sold;
Disclose the average mark-up by digital asset in the periods
presented; and
Tell us if the Company has sold digital assets at a loss due to
price volatility
exceeding the amount of the mark-up. To the extent that this has
occurred, tell us
your consideration of recognizing an impairment charge prior to
the sale occurring.
54. Please tell us, and revise your next amendment, to discuss how the
prices utilized in
digital asset transactions are determined. Indicate if the process for
determining the prices
utilized are different for ATM or BDCheckout transactions.
(j) Cost of Revenue, page F-49
55. Please revise to disclose, in tabular format, a breakout of the cost
of revenue line item by
specific cost type (i.e. cost of digital assets, fees paid to obtain
digital assets, etc.) for the
periods presented. Please discuss any material changes in specific
costs items in MD&A.
56. Please tell us how you concluded that it is appropriate to include the
gain on sales of
digital assets held for investment in cost of revenue. Please
reference the GAAP
authoritative literature you used to make this determination.
Lewis Silberman
GSR II Meteora Acquisition Corp.
November 8, 2022
Page 11
(n) Fair Value of Financial Instruments, page F-51
57. Please revise your next amendment to provide all of the disclosures in
ASC 820-10-50-2.
See example disclosure in ASC 820-10-55-100 through 104.
Note 5. Restatement, page F-54
58. Please revise your next amendment to include additional details
related to correction
adjustments (a), (b), (c), and (d). Specifically, include more
information as to what each
error relates to, how each error was determined, and the specific
details related to how the
correction amounts were determined that lead to the total as adjusted
amount.
Note 7. Digital Assets, page F-58
59. Please revise to expand your rollforward of digital assets to provide
by digital asset type
(BIT, LTC, ETH).
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact David Irving at 202-551-3321 or Bonnie Baynes at
202-551-4924 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Christopher Wall at 202-551-4162 or J. Nolan McWilliams, Acting Legal
Branch
Chief, at 202-551-3217 with any other questions.
FirstName LastNameLewis Silberman Sincerely,
Comapany NameGSR II Meteora Acquisition Corp.
Division of
Corporation Finance
November 8, 2022 Page 11 Office of
Finance
FirstName LastName