Author: BitpushNews
As he prepares to take over the White House around January 20, 2025, Trump continues to expand the new landscape of the crypto industry.
According to a report by the Financial Times, Donald Trump's social media company, Trump Media & Technology Group, is in advanced negotiations to acquire the cryptocurrency trading platform Bakkt.
According to two people familiar with the negotiations, Trump Media will acquire Bakkt outright, with Trump promising to retain a 53% stake, although the valuation and financial terms have not been disclosed.
The news has caused the stock prices of both companies to soar.
Trump Media (NASDAQ stock code DJT), in which Trump holds a majority stake, surged by double digits just minutes after the report was published. The company operates the Truth Social app and closed up over 16%. Bakkt experienced multiple trading halts due to high volatility and closed up over 163%.
Mediocre performance, on the verge of delisting
Bakkt was launched by Intercontinental Exchange (ICE) and was founded in 2018. It went public in October 2021 and provides technology services for cryptocurrency investors. Prior to going public through a SPAC, Bakkt had raised hundreds of millions of dollars from investors such as Boston Consulting Group, Galaxy Digital, ICE, and Microsoft's M12 venture fund, but it has struggled to turn a profit. Its latest quarterly report showed total revenue of $32.84 million and an operating loss of $27.4 million, a 48% reduction in losses compared to the same period last year.
Trump's relationship with Bakkt is quite extraordinary, as Bakkt's former CEO, Kelly Loeffler, was a co-chair of Trump's inauguration committee.
Loeffler's husband is Jeffrey Sprecher, the CEO of Intercontinental Exchange. In 2019, Georgia Governor Brian Kemp appointed Loeffler to replace Senator Johnny Isakson, who had resigned due to health reasons, in the Senate. Loeffler then resigned from her executive position at Bakkt. However, in the runoff election for the Senate seat, Loeffler was defeated by Democratic Senator Raphael Warnock.
Bakkt had previously stated that its cryptocurrency custody business might be shut down, although it had obtained regulatory approval from New York authorities. People familiar with the TMTG negotiations said this business would not be included in the deal. In the three months ending September 30, the custody business had an operating loss of $27,000 and revenue of $328,000.
Due to its depressed stock price, Bakkt had faced the risk of being delisted from the New York Stock Exchange until it conducted a 1-for-25 reverse stock split in April. Last week, its stock price rose 15%.
Expanding crypto landscape, stock performance exceeding fundamentals
The Trump family's foray into the cryptocurrency market is accelerating. The crypto project World Liberty Financial, launched in September, along with Trump's various cryptocurrency-related promises during his campaign (such as establishing a Bit reserve, creating a mining-friendly environment, and replacing the SEC chair), all demonstrate Trump's strong interest in the cryptocurrency industry.
This interest is directly reflected in the market. With Trump's election victory, retail investors' expectations for the Republican party, as well as optimism about the potential for crypto-friendly policies under a Trump administration, have caused significant volatility in the stock price of TMTG, the parent company of the social media platform Truth Social. In the run-up to the election, TMTG's stock price fluctuated by billions of dollars, and it has become one of the most actively traded US stocks. However, TMTG's revenue for this year is only $2.6 million, with a net loss of $363 million, yet its market capitalization exceeds $7 billion.
The user base of Truth Social is also relatively small, with an average daily website traffic of 646,000 visitors this month, according to Similarweb data, compared to 155 million daily visitors for Musk's X platform.
