Donald Trump’s bid to acquire struggling cryptocurrency firm Bakkt could face a turbulent approval process in New York that would put him 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 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 nominated last week to serve in 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 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, was not immediately clear, but Bakkt shares have a market cap of about $380 million.
Money-losing Bakkt’s real value to Trump lies in the three licenses it holds from New York’s 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 set up 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 combative toward the president-elect in the past, the ammunition to challenge the transfer of the coveted licenses, sources said.
A fresh wrinkle emerged Friday, when Trump abruptly transferred his roughly $4 billion stake in TMTG into a revocable trust controlled by his son, Donald Trump Jr., who will retain “sole voting and investment power,” according to SEC filings. The president-elect still indirectly owns the shares as the trust’s beneficiary and can retake direct control in the future.
“I think it was almost certainly done to give the president an arm’s length distance from whatever happens next at Truth Social – whether that’s a NY license, M&A or other exit,” an industry source familiar with the situation told The Post.
“Even with Donald Trump Jr. taking control, this still sets up a potentially epic clash between Gov. Hochul and the Trump family,” the source added. “Trump still retains a financial interest. Effectively, he would still reap all the profits of a sale or any revenue generated by the company.”
Bakkt shares swelled 4% on Friday after the trust was announced – in a potential sign that investors viewed it as bullish for a deal. Meanwhile, TMTG shares sank 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 remarks on Nov. 8 after having what she described as a “very cordial call” with Trump following his election win.
“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 also I’m going to stand up for protecting rights and, you know, reproductive rights and other rights.”
A DFS spokesperson 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 account and the character of its controlling executives.
In May, the president-elect was convicted on 34 felony charges in his historic Manhattan hush money case. He also owes a $454 million civil fraud judgment in New York. A federal judge indefinitely postponed sentencing in the criminal case following Trump’s election win.
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 judgment against Trump remain intact.
Major TMTG executives and stakeholders would undergo rigorous vetting by the DFS, which would also examine the company’s corporate governance practices as part of the review, sources said.
“The Hochul administration would have essentially veto power over the company’s crypto operations or their expansion by virtue of the fact that they are their regulator,” the source said.
The Truth Social parent may have hinted at its plans for Bakkt. Last month, TMTG filed a trademark application for a service called “TruthFi,” which would handle crypto payments, trading in digital assets and financial custody services.
Sources stressed that DFS itself is nonpartisan – and would not allow politics to influence any review of a license application.
“The staff does not bring politics into the process,” a former DFS official who requested anonymity said. “They follow what the law says, in terms of evaluating the new ownership, in terms of looking at the change of control applications.”
Trump — who blasted the Biden administration’s tight crypto regulations during his 2024 campaign — could take steps to smooth 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, sources said.
Trump stepped down as TMTG’s chairman in 2022 and has no formal role at the company. After the transfer, the trust will control Trump’s roughly 53% stake – nearly 115 million shares – in the company and majority voting rights. Trump recently said he had “no intention of selling” his shares upon taking office.
The Department of Financial Services will be in uncharted territory if asked to weigh in on a TMTG acquisition of Bakkt’s licenses, according to Matt Homer, a former DFS official and general partner at the Department of XYZ, a venture capital firm.
DFS will likely do a deep-dive into the terms of the trust – including vetting Trump Jr. and determining whether the shares will revert to Trump’s direct control within a specific timeframe. Trump himself also could be scrutinized, since the trust is revocable and he stands to financially benefit from TMTG.
“I think it will present novel 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 encounter some questions they’ve probably never grappled with before.”
Crypto licenses issued by the DFS are hard 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 robust corporate governance standards – a factor that would help its case for New York licenses, he said.
In order to make use of Bakkt’s licenses, TMTG would need to gain approval from the DFS through what’s known as a “change of control” application.
Sources told the FT that Bakkt’s crypto custody business – which relies on the trust charter – would likely by wound down and not included in the deal.
Bakkt said it was the company’s policy “not to comment on market rumors or speculation.”
