Donald Trump’s bid to acquire struggling cryptocurrency firm Bakkt could face a turbulent approval process in New York, putting him on a collision course with Gov. Kathy Hochul’s administration, The Post has learned.
Trump Media & Technology Group (TMTG), parent of Truth Social, is reportedly close to an all-stock acquisition of Bakkt, which was once led by Kelly Loeffler – a former US senator and Trump loyalist who was fired from the service last week. Was nominated to give. His cabinet as Small Business Administrator.
In 2020, Loeffler bragged in campaign ads about her “100% Trump voting record”.
Loeffler’s husband, Jeff Sprecher, is the CEO of Intercontinental Exchange, which owns a 55% stake in Bakkt in addition to owning the New York Stock Exchange. the terms of the deal, which were Reported by the Financial Times Last month, it wasn’t immediately obvious, but Bakkt shares have a market cap of about $380 million.
The real value of Bakkt, which lost money to Trump, lies in three licenses it received from the New York Department of Financial Services (DFS) — a virtual currency license, a money transmitter license and a limited-purpose trust charter, sources told The Post. A deal could establish TMTG as one of the few firms licensed to handle crypto transactions within the state.
Trump’s complicated legal history could give Hochul, who oversees DFS and has been aggressive toward the president-elect in the past, an opportunity to challenge the transfer of the coveted licenses, the sources said.
A fresh wrinkle emerged on Friday, when Trump suddenly transferred his nearly $4 billion stake in TMTG to a revocable trust Controlled by his son Donald Trump Jr., who will retain “sole voting and investment power,” according to an SEC filing. The President-elect still indirectly owns the shares as a beneficiary of the trust and may retake direct control in the future.
An industry source familiar with the situation told The Post, “I think it was almost certainly done to give the president an arm’s length from whatever happens next at Truth Social — whether it’s the NY license. , M&A or other exit.”
“Even with Donald Trump Jr. taking control, this still sets up a potentially epic confrontation between Governor Hochul and the Trump family,” the source said. “Trump still has financial interests intact. Effectively, he will still receive the full benefit of the sale or any revenue generated by the company.
Bakkt shares rose 4% on Friday after the trust announcement – a possible sign that investors saw it as bullish for the deal. Meanwhile, TMTG shares 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 the potential crypto deal, instead referring to the governor’s comments on Nov. 8, which he described as a “very cordial call” with Trump following his election victory. Was.
“I basically reaffirmed that there are areas where we can work together, like infrastructure where we rely on federal money and, you know, he shares my priorities,” Hochul said. ” “But I will also stand up to protect rights and, you know, reproductive rights and other rights.”
A spokesperson for DFS said the agency has the most comprehensive regulatory framework for crypto in the US and noted that any entity must meet standards for factors ranging from cybersecurity and risk management to the character of the account and its controlling authorities. Will have to do.
In May, there was a presidential election Man convicted of 34 felony charges in historic Manhattan hush money caseHe also owes a $454 million civil fraud case in New York. a federal judge Sentencing in criminal case postponed indefinitely after Trump’s election victory,
However, Manhattan District Attorney Alvin Bragg and New York Attorney General Letitia James, both Democrats, are fighting to ensure The pending charges and civil judgments against Trump remain intact.
Sources said key TMTG officials and stakeholders will undergo rigorous scrutiny by the DFS, which will also examine the corporate governance practices of the company as part of the review.
“The Hochul administration will essentially have veto power over the company’s crypto operations or their expansion because they are their regulator,” the source said.
Truth Social’s parent may have hinted at its plans for Bakkt. last month, TMTG filed a trademark application For a service called “TruthFi,” which will handle crypto payments, trading in digital assets, and financial custody services.
Sources stressed that DFS itself is non-partisan – and will not allow politics to influence any review of the license application.
“Staff don’t bring politics into this process,” said a former DFS official, requesting anonymity. “In terms of evaluating new ownership, in terms of looking at change of control applications, they follow what the law says.”
Trump – who criticized the Biden administration’s strict crypto regulations during his 2024 campaign – may take steps to smooth approvals once he moves into the White House. Sources said this includes introducing a federal route to crypto trading licenses that would make any move in New York moot.
Trump resigned as chairman of TMTG in 2022 and has no formal role in the company. After the transfer, the trust will control Trump’s approximately 53% stake in the company – about 115 million shares – and majority voting rights. Trump recently said he had no intention of selling his shares upon taking office.
According to Matt Homer, a former DFS executive and general partner at venture capital firm XYZ Department, the Department of Financial Services would be in uncharted territory if it were asked to consider TMTG’s acquisition of Bakkt’s license.
DFS will likely take a deeper look at the terms of the trust — including investigating Trump Jr. and determining whether the shares will return to Trump’s direct control within a specific time frame. Trump himself may also be investigated, as the trust is revocable and he stands to benefit financially from the TMTG.
“I think it will present new questions that have no precedent,” Homer said. “DFS should try to play it straight and maybe not be political or partisan, but at the same time, they’re going to have to face some questions that they probably haven’t faced before.”
Homer said it is difficult to obtain a crypto license issued by DFS and considered the national gold standard. PayPal, Coinbase and Gemini are among less than three dozen companies that currently hold the relevant license.
As a publicly traded company, TMTG is already subject to strong corporate governance standards, he said – a factor that will help in terms of the New York license.
To use Bakkt’s license, TMTG will need to obtain approval from DFS through a “Change of Control” application.
Sources told the FT that Bakkt’s crypto custody business – which relies on a trust charter – would likely be spun off and not included in the deal.
Bakkt said it was the company’s policy “not to comment on market rumors or speculation.”
