Donald Trump’s bid to buy struggling cryptocurrency firm Bakkt could face a murky approval process in New York that would put it on a collision course with Gov. Kathy Hochul’s administration, The Post has learned.
Trump Media and Technology Group (TMTG), the parent of Truth Social, is said to be close to an outright acquisition of Bakkt, which was once run by Kelly Loeffler — a former US senator and Trump loyalist who was appointed last week to serve in his Cabinet as small business administrator.
In 2020, Loeffler boasted in campaign ads about her “100% Trump voting record.”
Loeffler’s husband, Jeff Sprecher, is the CEO of Intercontinental Exchange, which in addition to owning the New York Stock Exchange owns a 55% stake in Bakkt. Terms of the deal, which was reported by the Financial Times last month, were not immediately clear, but Bakkt’s shares have a market value of about $380 million.
The real value of Bakkt losing money to Trump lies in the three licenses it holds from the New York Department of Financial Services (DFS) – a virtual currency license, a money transmitter license and a limited-purpose trust card, 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 has oversight of DFS and has been belligerent to the president-elect in the past, ammunition to challenge the transfer of the coveted licenses, the sources said.
A new wrinkle emerged Friday when Trump abruptly transferred his nearly $4 billion stake in TMTG to a revocable trust controlled by his son, Donald Trump Jr., who will hold “sole power of voting and investing,” according to SEC filings. The president-elect still indirectly owns the stock as a beneficiary of the trust and may regain direct control in the future.
“I think it’s almost certainly done to give the president an equal distance from whatever happens next at Truth Social — whether that’s a NY license, M&A or other exit,” an industry source said. familiar with the situation to The Post.
“Even with Donald Trump Jr. taking over, this still sets up a potentially epic clash between Gov. Hochul and the Trump family,” the source added. “Trump still has a financial interest. Effectively, he would still reap all the profits of a sale or any income generated by the company.”
Bakkt shares rose 4% on Friday after the trust was announced – in a possible sign that investors saw it as good for a deal. Meanwhile, shares of TMTG fell nearly 3% on the news.
Representatives for the Department of Financial Services, TMTG and the Trump campaign did not return requests for comment.
Hochul’s office declined to comment specifically on the potential crypto deal, instead referring to the governor’s Nov. 8 remarks after having what she described as a “very cordial phone call” with Trump after his election victory.
“I basically just reaffirmed that there are areas we can work together, like infrastructure where we rely on federal money, and, you know, he seems to share my priorities,” Hochul said. “But I’m also going to stand up for the protection of rights and, you know, reproductive rights and other rights.”
A DFS spokesperson said the agency has the most comprehensive crypto regulatory framework in the US and noted that each entity must meet standards on factors ranging from cybersecurity and risk management to the account and character of its controlling executives. .
In May, the president-elect was convicted of 34 criminal charges in his landmark Manhattan money case. He also owes a $454 million civil fraud judgment in New York. A federal judge indefinitely postponed sentencing in the criminal case after Trump’s election victory.
However, Manhattan District Attorney Alvin Bragg and New York Attorney General Letitia James, both Democrats, are fighting to ensure that the pending charges and civil trial against Trump remain intact.
TMTG’s top executives and stakeholders would undergo rigorous vetting by the DFS, which would also look into the company’s corporate governance practices as part of the review, the sources said.
“The Hochul administration would essentially have veto power over the company’s crypto operations or expansion due to the fact that they are their regulator,” the source said.
The Truth Social parent may have hinted at his plans for Bakkt. Last month, TMTG filed a trademark application for a service called “TruthFi,” which would handle crypto payments, digital asset trading, and financial custody services.
The sources stressed that the DSHP itself is non-partisan – and will not allow politics to influence the review of a license application.
“The staff does not bring politics into the process,” said a former DSHP official who requested anonymity. “They follow what the new property assessment law says in terms of looking at change of control applications.”
Trump — who attacked the Biden administration’s strict crypto regulations during his 2024 campaign — may take steps to relax the approvals once he’s in the White House. That includes introducing a federal pathway for a crypto trading license that would make any dispute in New York moot, the sources said.
Trump stepped down as chairman of TMTG in 2022 and has no official role in the company. After the transfer, the trust will control roughly 53% of Trump’s stake — nearly 115 million shares — in the company and majority voting rights. Trump recently said he had “no intention of selling” his stock after taking office.
The Department of Financial Services will be in uncharted territory if asked to evaluate a TMTG purchase of Bakkt’s licenses, according to Matt Homer, a former DFS official and general partner at XYZ Department, a venture capital firm.
DFS is likely to take a deep dive into the terms of the trust — including Trump Jr.’s vetting. and determining whether the shares will return to Trump’s direct control within a certain time frame. Trump himself may also be scrutinized, as the trust is revocable and he will benefit financially from TMTG.
“I think it will present new questions that may not have precedent,” Homer said. “DFS should and probably will try to play it straight and not be political or partisan, but at the same time, they’re going to face some questions they’ve probably never faced before.”
Crypto licenses issued by DFS are difficult to obtain and are considered a national gold standard, Homer said. PayPal, Coinbase and Gemini are among less than three dozen firms that currently hold a relevant license.
As a publicly traded company, TMTG is already subject to strong corporate governance standards — a factor that would help its case for New York licenses, he said.
In order to use Bakkt’s licenses, TMTG will need to obtain approval from DFS through what is known as a “change of control” application.
Sources told the FT that Bakkt’s crypto custody business – which relies on the trust charter – is likely to be spun off and not included in the deal.
Bakkt said it was the company’s policy “not to comment on rumors or market speculation.”
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