The president’s namesake media company, Trump Media and Technology Group (DJT), has agreed to a deal with Yorkville Acquisition Corp.
The Cayman Islands-incorporated “blank-check company” and DJT will launch a crypto treasury firm geared toward stockpiling Crypto.com’s native token, CROS (CRO), the partnering companies disclosed in a Tuesday filing.
The new firm will be called Trump Media Group CRO Strategy and is expected to trade under the ticker symbol MCGA. It will be majority owned by the president’s media company, along with Crypto.com and advisor Yorkville.
Also known as a special purpose acquisition company (SPAC), a blank-check company is a shell corporation that raises money through an IPO with the goal of merging with or acquiring an existing private company. These vehicles are mainly used for speedier public listings but often come with the drawback of a lack of transparency ahead of a listing compared to a typical IPO.
As part of the deal, Crypto.com will transfer about 684 million CRO tokens worth about $105 million to Trump Media, in exchange for 2.8 million units of its stock and $50 million in cash, according to the filing.
Trump Media’s stock rose as much as 10% Tuesday morning following the release, while Crypto.com’s CRO token jumped as much as 35%.
“We continue to be bullish on cryptocurrency,” Trump Media CEO Devin Nunes said in a statement tied to the announcement.
“Companies of all sizes and sectors are strategically planning for the future by establishing digital asset treasuries anchored by assets that have created a comprehensive value proposition and are poised for even greater utility,” Nunes added.
The exchanged stock and tokens held by Trump Media, Crypto.com, and Yorkville will be subject to a mandatory one-year lock-up period after the deal closes.
“The sheer size and structure of this project will encompass more than the entire current market capitalization of CRO,” Crypto.com CEO Kris Marszalek said in the release.
CRO is a lesser-known crypto token with a total market capitalization of $6.6 billion. Counting an additional access to a $5 billion line of credit, the company will have more “dry powder” than the total market capitalization of the CRO token, Marszalek said in a post on X.
It will become the platform token for Trump Media-owned social media property Truth Social.
The move is the latest example of a wave of either private companies rushing to the public market or public firms pivoting their business model to follow in the footsteps of a play laid out years ago by Michael Saylor, founder of Strategy (MSTR), formerly MicroStrategy. Their main goal: buying and holding bitcoin (BTC-USD), ether (ETH-USD), or other digital assets.
Though the biggest crypto treasury company, Saylor’s Strategy, started stockpiling bitcoin in 2020, the fad to follow suit has grown in popularity this year. One reason is that President Trump has vowed to make the US the “crypto capital of the planet,” and this has made it far easier for industry firms to initiate public listings.
Crypto treasury firms often issue a mix of debt and equity to accelerate the pace they can get crypto assets onto their balance sheet.
The outcome has prompted a market phenomenon where the stocks for many of these companies can trade at a significant premium to the underlying value of the crypto assets they hold. How long such a dynamic can persist remains a hotly debated topic in the world of finance.
Crypto exchange-issued tokens are also not without their share of controversy. Critics argue that because these tokens have no real world utility, their market valuations are highly subjective and therefore fragile. A core piece of the failure of crypto exchange FTX in November 2022 came when the company began allowing its connected hedge fund Alameda Research to use its own exchange token called FTT as collateral for loans.
What’s unique about this crypto treasury deal compared with others is that this new company will own a fifth of outstanding CRO tokens, a much greater share than Strategy’s holdings, 3% of bitcoin’s total supply.
The deal also follows an earlier announcement in March for Trump Media to offer crypto-related ETFs in partnership with Crypto.com. It also notches one more crypto venture tied to President Trump or his family.
Earlier this year, Crypto.com’s parent company, Foris DAX Inc., donated $10 million to a Trump-affiliated super PAC MAGA Inc., according to Federal Election Commission filings from earlier this month.
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