Key Takeaways:
Trump Media and Technology Group, a social media and tech company majority owned by President-elect Donald Trump, is reportedly in “advanced” negotiations to acquire the cryptocurrency trading platform Bakkt, as per a report by Financial Times citing two individuals familiar with the matter.
Trump Media and Technology Group In Talks To Acquire $150 Million Crypto Exchange Bakkt
The announcement had a dramatic effect on the shares of both companies as they spared after the report was published on Monday. Trump Media (DJT), which operates the Truth Social app, saw its price climb 16% to reach $32, while Bakkt’s (BKKT) stock skyrocketed by 162% to trade around $29 shortly before the market closed.
Details regarding the company’s valuation are still being discussed, but as of Monday, the market capitalization of Bakkt stood at just over $150 million. However, the deal will not include the company’s crypto custody business, which it is likely to wind down.
Bakkt was established by Intercontinental Exchange, which is also the parent company of the New York Stock Exchange. Kelly Loeffler, a former CEO of Bakkt, is the co-chair of Trump’s inauguration committee and married Intercontinental Exchange CEO Jeffrey Sprecher. She left her position as Bakkt’s top executive in 2019 after Georgia Governor Brian Kemp appointed her to the U.S. Senate seat vacated by Senator Johnny Isakson, who resigned due to health reasons.
In June, it was reported that Bakkt was considering putting itself up for sale and has been working with a financial adviser to weigh strategic options, including a possible breakup of its businesses. Earlier this year, the crypto exchange said in a filing with the U.S. Securities and Exchange Commission (SEC) that it might not be able to continue as a “going concern”.
Soon after the company appointed its current CEO Andy Main, he announced that the proceeds from a capital rise and its plans to reduce cash expenses and other related cost savings had “alleviated the conditions” that raised doubts about Bakkt’s future.
In its Q3 2024 filing, Bakkt reported a total revenue of $328.4 million and an operating loss of $27.4 million, which is a 48% improvement from the previous year. In March, the New York Stock Exchange had warned the company that its common stock was at risk of being delisted because changes hands at an average below the exchange’s $1 per share minimum for at least 30 consecutive trading days.
Meanwhile, Trump Media and Technology Group has seen its market value rise and fall by billions of dollars in the runup to this year’s presidential election due to retail investors betting on the Republican candidate’s momentum and political prospects.
Despite reporting a net loss of $363 million and revenue of $2.6 million this year, it still boasts a market capitalization above $7 billion. According to its latest fiscal quarter report, the company holds nearly $673 million in cash and cash equivalents.
Trump Is Cementing His Legacy As The “Crypto Champion”
The development marks yet another significant foray by the former president into the cryptocurrency space. During his campaign, Trump positioned himself as the “crypto candidate”, embracing digital currencies on multiple fronts, such as accepting donations in various crypto assets, signaling his acceptance of the burgeoning sector.
Trump’s landslide victory has led to continued enthusiasm for the advent of a pro-crypto administration, also helping drive the value of Bitcoin (BTC), the world’s largest cryptocurrency by market cap, to multiple all-time highs in the span of weeks.
The former President has also been a vocal critic of the SEC chairman Gary Gensler, who has taken a tough stance on the crypto sector, employing a “regulation by enforcement” strategy that has forced several industry leaders, such as Coinbase, Binance, and Ripple Labs, to pay hefty fines for operational irregularities due to the lack of robust regulations.
Speaking at the Bitcoin 2024 conference in Nashville, Trump promised to fire Gensler and replace him with a pro-crypto chairman. This has led to speculation that the new administration could be working on instilling consistent regulations for the digital asset industry.
In a more ambitious move, a month before the election, Trump launched a new cryptocurrency venture called World Liberty Financial, a decentralized finance (DeFi) protocol that aims to blur the lines between traditional finance and DeFi. The venture is seen as a strategy to capitalize on his growing influence in the crypto market.
The crypto market has reacted positively to Trump’s election victory, with Bitcoin getting ever closer to the $100,000 mark two months before he officially assumes the presidency. This market rally underscores the expectation of a policy environment that could accelerate the mainstream adoption of cryptocurrencies under his term.
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