Donald Trump's bid to take over struggling cryptocurrency company Bakkt could face a turbulent approval process in New York that could put him on a collision course with Gov. Kathy Hochul's administration, The Post has learned.
Trump Media and Technology Group (TMTG), the parent company of Truth Social, is reportedly close to acquiring all of the shares in Bakkt, which was previously headed by Kelly Loeffler — the former US senator and Trump loyalist who was nominated last week to serve as prime minister. . His government as a small business official.
In 2020, Loeffler boasted in campaign ads of Trump's “100% voting record.”
Loeffler's husband, Jeff Sprecher, is CEO of InterContinental Exchange, which in addition to owning the New York Stock Exchange holds a 55% stake in Bakkt. The 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.
Sources told The Post that the real value of loss-making Bakkt to Trump lies in the three licenses it obtained from the New York Department of Financial Services (DFS) — a virtual currency license, a money transmitter license, and a limited-purpose trust charter. The deal could make TMTG one of the few companies licensed to handle cryptocurrency transactions within the state.
Trump's complex legal history could give Hochul, who oversees DFS and has been an opponent of the president-elect in the past, ammunition to challenge the transfer of the coveted licenses, the sources said.
A new problem arose on Friday, when Trump suddenly transferred his $4 billion stake in TMTG to a revocable trust controlled by his son, Donald Trump Jr., who will retain “sole voting and investing authority,” according to Securities and Exchange Commission filings. The president-elect still owns the shares indirectly as the beneficiary of the trust and can regain direct control in the future.
“I think it was almost certainly done to give the president an arm's length from whatever happens next at Truth Social — whether that's licensing in New York, mergers and acquisitions or another exit,” an industry source familiar with the situation told The Post. .
“Even with Donald Trump Jr. in control, this still sets up a potentially epic conflict between Governor Hochul and the Trump family,” the source added. Trump still maintains a financial interest. Effectively, he will still reap all the profits from the sale or any revenue the company generates.
Bakkt shares swelled 4% on Friday after the trust was announced – a possible sign that investors view it as bullish on the deal. Meanwhile, TMTG shares fell nearly 3% on the news.
Representatives for the Financial Services Administration, TMTG and the Trump campaign did not respond to requests for comment.
Hochul's office declined to comment specifically on the potential cryptocurrency deal, instead pointing to the governor's comments on November 8 after making what she described as a “very cordial call” with Trump after his election victory.
“I just reiterated that there are areas where we can work together, like infrastructure where we depend on federal money, and, you know, he seems to share my priorities,” Hochul said. “But I will also advocate for protecting rights, you know, reproductive rights and other rights.”
A DFS spokesperson said the agency has the most comprehensive regulatory framework for cryptocurrencies in the United States and noted that any entity must meet criteria for factors ranging from cybersecurity and risk management to the account and character of the executives controlling it.
In May, the president-elect was convicted of 34 criminal charges in his landmark hush money case in Manhattan. He also owes a $454 million civil fraud judgment in New York. A federal judge indefinitely postponed sentencing in the criminal case after Trump won the election.
However, Manhattan District Attorney Alvin Bragg and New York Attorney General Letitia James, both Democrats, are fighting to ensure the pending charges and civil ruling against Trump remain intact.
TMTG executives and key stakeholders will be subject to stringent scrutiny by the DFS, which will also examine the company's corporate governance practices as part of the review, the sources said.
“Hochul’s management will essentially have veto power over the company’s cryptocurrency operations or expansion by virtue of being its regulator,” the source said.
Truth Social may have hinted at its plans for Bakkt. Last month, TMTG filed to trademark a service called “TruthFi,” which would handle cryptocurrency payments, trading in digital assets, and financial custody services.
Sources stressed that DFS itself is nonpartisan — and will not allow politics to influence any review of a license application.
“The staff does not bring politics into the process,” said a former Department of Field Support official who requested anonymity. “They are following what the law says, in terms of evaluating new ownership, in terms of considering change-of-control requests.”
Trump — who criticized the Biden administration's strict cryptocurrency regulations during his 2024 campaign — could take steps to facilitate approvals once he reaches the White House. That includes offering a federal path to cryptocurrency trading licensing that would make any dispute in New York moot, the sources said.
Trump stepped down as chairman of TMTG in 2022 and has no formal role at the company. After the transfer, the fund will control Trump's roughly 53% stake — roughly 115 million shares — in the company and majority voting rights. Trump recently said he has “no intention of selling” his shares when he takes office.
The DFS would be in uncharted territory if asked to consider TMTG's takeover of Bakkt's licenses, according to Matt Homer, a former DFS official and general partner in the XYZ division, a venture capital firm.
DFS will likely delve deeper into the terms of the trust — including examining Trump Jr. and determining whether the shares will return to Trump's direct control within a specific time frame. It is also possible that Trump himself could come under scrutiny, given that the trust is revocable and that he would benefit financially from TMTG.
“I think it will raise new questions that may not have precedent,” Homer said. “Field support forces must, and probably will, try to play things straight and not be political or partisan, but at the same time, they will face some questions they may not have grappled with before.”
Homer said that cryptocurrency licenses issued by the DFS are difficult to obtain and are considered a national gold standard. PayPal, Coinbase, and Gemini are among less than thirty companies that currently hold a relevant license.
As a publicly traded company, TMTG is already subject to strong corporate governance standards — a factor that should help it obtain New York licenses, he said.
In order to benefit from Bakkt's licences, TMTG will need to obtain approval from DFS through what is known as a “change of control” application.
Sources told the Financial Times that Bakkt's cryptocurrency custody business – which relies on a trust covenant – will likely be scaled back and will not be included in the deal.
Bakkt said the company's policy is “not to comment on market rumors or speculation.”
