Donald Trump's plan to buy troubled cryptocurrency company Bakkt could face a chaotic approval process in New York state, potentially putting it in conflict with Gov. Kathy Hochul's administration. The Post reported that.
Truth Social's parent company, Trump Media and Technology Group (TMTG), is a subsidiary of Bakkt, formerly led by Kelly Loeffler, a former U.S. senator and Trump supporter who was nominated as a presidential candidate last week. The company is reportedly close to an all-stock acquisition. His cabinet was sworn in as the Small Business Administrator.
In 2020, Loeffler boasted of a “100% Trump voting record” in campaign ads.
Loeffler's husband, Jeff Sprecher, is the CEO of Intercontinental Exchange and owns 55% of Bakkt, in addition to owning the New York Stock Exchange. The terms of the transaction are The Financial Times reported Bakkt stock has a market cap of about $380 million, although the stock's price was not immediately available last month.
The real value of the loss-making Bakkt company to Mr. Trump lies in the three licenses it holds from the New York Department of Financial Services (DFS): a virtual currency license, a money transfer license, and a limited-purpose trust charter, sources told the paper. spoke. If an agreement is reached, TMTG could become one of the few companies licensed to handle virtual currency transactions in the state.
Trump's complicated legal history gives Hochul, who oversees DFS and has been combative toward the president-elect in the past, ammunition to challenge the transfer of the coveted license, officials said. There is a possibility that it will be given.
SEC filings show that on Friday, President Trump abruptly transferred approximately $4 billion in TMTG stock to a revocable trust controlled by his son, Donald Trump Jr., with Trump Jr. having “the sole right to vote.” and investment rights,” a new problem arose. The president-elect indirectly owns the stock as a beneficiary of the trust and could regain direct control in the future.
“Regardless of what happens next with Truth Social, whether it's the New York license, M&A, or any other exit, it's almost certainly done to keep the president at arm's length. I don’t think so,” an industry source familiar with the matter told the Post.
“Even if Donald Trump Jr. takes power, there is still the possibility of a potentially epic conflict between Governor Hochul and the Trump family,” the source added. “Mr. Trump still retains a financial interest. In effect, he will receive all of the proceeds from the sale and any revenue generated by the company.”
Bakkt shares rose 4% on Friday after the trust's announcement, a sign that investors may view the deal as bullish. Meanwhile, TMTG stock fell nearly 3% on the news.
Representatives for the Department of Financial Services, TMTG and the Trump campaign did not respond to requests for comment.
Hochul's office declined to comment specifically on potential cryptocurrency transactions, instead having what she described as a “very cordial call” with Trump after his election victory. He referred to the governor's later remarks on November 8.
“I basically just reaffirmed that there are areas where we can work together, like infrastructure, which depends on federal funding. You know, he seems to share my priorities. ,” Hochul said. “But I'm going to stand up for rights and reproductive rights and other rights.”
A DFS spokesperson said DFS has the most comprehensive regulatory framework for cryptocurrencies in the United States, and any entity is subject to standards on factors ranging from cybersecurity and risk management to the nature of accounts and controlling executives. He pointed out that the requirements must be met.
In May, the president-elect was convicted of 34 felonies in the historic Manhattan hush-money scandal. He also owes $454 million from a civil fraud judgment in New York state. Following Trump's election victory, a federal judge indefinitely postponed sentencing in the criminal case.
But Manhattan District Attorney Alvin Bragg and New York State Attorney General Letitia James, both Democrats, are fighting to ensure that the pending charges and civil judgment against Trump are upheld.
TMTG's key executives and stakeholders will undergo a rigorous review by DFS, which will also examine the company's corporate governance practices, the people said.
“Due to the fact that the Hochul administration is the regulator, it will effectively have veto power over the company's cryptocurrency business and its expansion,” the person said.
Truth Social's parent company may have hinted at plans for Bakkt. last month, TMTG has filed a trademark application The service, called “TruthFi,” handles cryptocurrency payments, digital asset trading, and financial custody services.
Officials emphasized that DFS itself is nonpartisan and will not allow politics to influence the review of license applications.
“The staff doesn't bring politics into the process,” said a former DFS official who requested anonymity. “They are following the requirements of the law in terms of evaluating new ownership and considering changes to management applications.”
Trump, who slammed the Biden administration's strict cryptocurrency regulations during the 2024 campaign, may take steps to facilitate approval once he enters the White House. Officials say this includes introducing a federal pathway for virtual currency trading licenses that would nullify any disputes in New York.
Trump stepped down as TMTG chairman in 2022 and has no formal role at the company. After the transfer, the trust will control about 53% of Mr. Trump's shares in the company, or about 115 million shares, and a majority of voting rights. Trump recently said he has “no intention of selling” his company's stock after taking office.
Matt Homer, a former DFS official and general partner at the Department of Venture Capital XYZ, said the Department of Financial Services would be entering uncharted territory if TMTG were asked to consider licensing Bakkt.
DFS will likely take a closer look at the terms of the trust, including vetting Trump Jr. and determining whether the shares will return to Trump's direct control within a certain period of time. President Trump himself could come under scrutiny because the trust is revocable and he stands to benefit financially from TMTG.
“I think it presents novel questions that have never been seen before,” Homer said. “DFS should and probably will do things in a non-political and non-partisan way, but at the same time it's probably going to be faced with some issues it hasn't dealt with before. .”
Homer said crypto licenses issued by DFS are difficult to obtain and are considered the national gold standard. Fewer than 30 companies currently hold relevant licenses, including PayPal, Coinbase, and Gemini.
As a publicly traded company, TMTG is already subject to strong corporate governance standards, which will be a helpful factor in applying for a New York license, he said.
To take advantage of Bakkt's license, TMTG must obtain approval from DFS through a so-called “change of control” application.
People familiar with the matter told the FT that Bakkt's crypto custody business, which relies on a trust charter, will likely be terminated and will not be included in the deal.
Buck said the company's policy is “not to comment on market rumors or speculation.”
