Trump Media Group follows MicroStrategy to launch $2.5 billion Bitcoin vault plan, the presidential family plays with financial tools

Author: Weilin, PANews

The Trump family's calculations in the cryptocurrency circle are getting louder and louder. On the evening of May 27, Trump Media & Technology Group announced that it would launch a financing plan of up to $2.5 billion to include Bitcoin in the company's treasury assets. The company has reached a subscription agreement with about 50 institutional investors and plans to raise funds by issuing about $1.5 billion in common stock and $1 billion in zero-interest convertible bonds, with the conversion price of the convertible bonds equivalent to a premium of 35%.

According to official documents filed by Trump Media Technology on May 27, the funds will be used to purchase Bitcoin as an important part of the company's balance sheet, held together with existing cash, cash equivalents and investment assets. As of the end of the first quarter of 2024, these assets totaled $759 million .

The stock price fell 10.38% in a single day after the media report was denied and the official announcement was made.

“We view Bitcoin as the ultimate tool for financial freedom, and now Trump Media has made cryptocurrency a significant part of our assets,” Trump Media CEO and Chairman Devin Nunes said in a press release. “This is our first crown jewel acquisition, and this investment will help the company fight harassment and discrimination at financial institutions — a problem faced by many Americans and American businesses — while also creating synergies for subscription payments, utility tokens, and other planned transactions on the Truth Social and Truth+ platforms.”

The fundraising is expected to be completed around May 29. Crypto.com and Anchorage Digital will provide custody services for the Bitcoin vault, while Yorkville Securities and Clear Street will serve as the main placement agents for the offering. Cantor Fitzgerald & Co. serves as financial advisor.

Influenced by the news, the company's stock price rose briefly before the market opened, then turned down after the opening of the day, and closed down 10.38%. The stock has fallen 31% so far this year. The price of Bitcoin once exceeded $110,000, and the market reaction was mixed.

It is worth noting that earlier on May 27, the Financial Times quoted six anonymous sources as saying that Trump Media Technology Group plans to raise $3 billion through stock sales to invest in Bitcoin and other cryptocurrencies. The company strongly denied this, stating that "the stupid reporters of the Financial Times listened to even stupider sources."

According to a previous report by the Financial Times, the stake is expected to be sold at the market price at the close of May 23. On that day, Trump Media (DJT) closed at $25.72, up 4.6% on the day. As of May 23, Trump Media's market value was $5.7 billion.

Trump Media & Technology Group is a company owned by US President Trump. As of December 17, 2024, Trump holds a total of 52.9% of the shares. The company was incorporated on December 11, 2020, and its three major brands include Truth Social, Truth+, and Truth.Fi. As of December 20, Trump has transferred approximately $4 billion worth of shares in his media company to a trust fund controlled by his eldest son, Donald Trump Jr. According to a document filed with the U.S. Securities and Exchange Commission (SEC), Trump was previously the largest shareholder of Trump Media & Technology Group, holding nearly 115 million shares. After the transfer, he will no longer hold any shares directly, but will become the sole beneficiary of the trust. Donald Trump Jr. is also a member of the board of directors of Trump Media.

Following the example of MicroStrategy, Trump's version of "Bitcoin Vault" mode is launched

Trump Media Technology's move is widely seen as imitating MicroStrategy's (now renamed Strategy, Chinese name Micro Strategy) "Bitcoin reserve" strategy. Strategy, led by Michael Saylor, has continued to purchase Bitcoin since 2020 and raised funds through the issuance of stocks, convertible bonds, preferred stocks and other financial instruments. Increasing Bitcoin holdings has become its core strategy. As of May 26, according to Strategy's latest disclosure, the company has purchased a total of 580,250 BTC, with a total cost of US$40.61 billion and an average purchase price of US$69,979, approaching the US$70,000 mark.

There are different interpretations of this strategy in the market. Supporters say that although the outside world may often worry about the high leverage risk of this strategy, the data shows that this concern is not true. Although Strategy's total debt is US$8.2 billion, the debt interest rate is only 0.421% , and the annual interest expense is only US$34 million. Combined with preferred stock dividends, the overall leverage cost is extremely low. Critics believe that this model essentially relies on continuous financing and continuous dilution of shareholder equity to "pile up" Bitcoin positions . Once market sentiment reverses or mNAV (representing the current stock price and the value of Bitcoin it owns) falls below 1.0, it will collapse.

Transforming into financial services and crypto companies, the presidential family plays a big game of capital

Last quarter, Trump Media earned just $820,000 from advertising and other sources, while losing $32 million.

This time, the $2.5 billion financing plan is an important step in Trump Media Technology's strategy to gradually deepen into the crypto field. In April, the media company disclosed its plan to explore utility tokens in a letter to shareholders. Users of the "Truth Digital Wallet" can use the token to pay for "Truth+ subscription fees" and may also be used to pay for "other products and services within the Truth Social ecosystem" in the future.

On March 24, Trump Media & Technology Group announced a non-binding agreement with cryptocurrency exchange Crypto.com to collaborate on launching a series of exchange-traded funds and related products. These ETFs are expected to include digital assets as well as securities focused on U.S. manufacturing, covering different industries such as energy. They are scheduled to be launched later this year, subject to regulatory approval.

As early as January this year, Trump Media Technology Group launched Truth.Fi, planning to get involved in cryptocurrency investment. The new business is allowed to invest up to $250 million of its more than $700 million cash reserves in traditional investment tools, special account management accounts (SMAs), exchange-traded funds (ETFs), Bitcoin, and "similar cryptocurrencies or crypto-related securities."

According to officials, these SMAs will be developed in collaboration with Charles Schwab, which will also provide extensive advice on Truth.Fi investments and strategies. It is expected that these tools and products will focus on investing in growth, manufacturing and energy companies in the United States, as well as investments that help strengthen the Patriot Economy.

The latest move by Trump Media & Technology Group also echoes the changes in US regulatory and crypto policies. On March 6 this year, US President Trump signed an executive order announcing the inclusion of Bitcoin in the US strategic reserve. In addition, he announced the establishment of the "US Digital Asset Reserve", incorporating five digital currencies (Bitcoin, Ethereum, Ripple, SOL and ADA) into the government's asset reserves, and reiterated that he would ensure that the United States would become the "global cryptocurrency capital."

In general, Trump Media is moving towards its goal of building a new "Truth Social ecosystem" that integrates media, financial services and crypto assets through this large-scale financing and Bitcoin reserve strategy. However, whether this series of measures will bring positive impetus to the crypto industry or make it deeply trapped in the vortex of Washington politics remains to be further verified by the market and time.