[Bakkt Holdings] DJT's announcement for its partnership with Charles Schwab is exaggerated and distorted by a short seller, Ningi Research


The media article:  

Bakkt falls as Trump’s Truth.Fi launch seen taking acquisition off table | Markets Insider


The only fact announced so far is that DJT is partnering with Charles Schwab for Truth.Fi's investments and strategy, with Charles Schwab providing custody services and broad advisory support for $250M of DJT's $700M in assets. Bakkt's primary business focuses on cryptocurrency trading platforms, unlike Charles Schwab, which offers integrated financial services for proprietary trading. This partnership seems to simply designate Charles Schwab as DJT's proprietary investment service provider. DJT has chosen Charles Schwab among the major US financial firms such as Fidelity, Vanguard, and Goldman Sachs. The choice of Schwab as a partner has political undertones, as founder Charles Schwab has historically been a significant Republican donor, and his granddaughter Samantha Schwab now serves as a deputy chief of staff at the Treasury Department. DJT's business partnership can be considered a reward for Charles Schwab. No surprises at all.

Looking back to last November when there were media reports that DJT was discussing the acquisition of Bkkt, the market seemed to believe that DJT's entry into the cryptocurrency trading platform business would create synergy with DJT's existing social media business. This theory remains valid, and DJT has not given any indication that it would not pursue the cryptocurrency trading platform business. Rather, DJT announced that new products and services from Truth.Fi will be rolled out in 2025. Note that DJT filed a trademark application last November for TruthFi, which it described as a platform for crypto payments, financial custody services and trading in digital assets. In this application, TruthFi itself is described as a platform for crypto payments and trading digital assets. The announcement is silent on whether DJT would outsource all of such financial functions to Charles Schwab.

If DJT had decided to enter the cryptocurrency trading platform business with Charles Schwab, it would have at least mentioned EDX Market, a crypto exchange co-founded by Charles Schwab. The announcement is utterly silent on EDXM. EDXM has a complex shareholder structure involving founding investors such as Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital, and Virtu Financial. With such diverse shareholders, business negotiations will be more complicated and it would be hard to reach a certain conclusion that satisfies all the stakeholders. DJT's business collaboration with or acquisition of EDXM is way more than to persuade Charles Schwab alone. I don't believe that DJT has any compelling reasons to acquire EDXM.

I cannot yet conclude whether DJT will eventually acquire Bakkt. However, one thing is certain: this announcement has not eliminated the possibility of DJT and Bkkt collaborating in the cryptocurrency trading business.

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