Trump's crypto advisor raises $300 million to start Bitcoin investment firm

Author: Yueqi Yang; Translator: Block unicorn

David Bailey, who advised President Donald Trump on cryptocurrency policy during the 2024 campaign, is raising $300 million to launch a publicly traded Bitcoin investment company, according to people familiar with the matter. He follows a series of companies that buy cryptocurrencies and tries to replicate the success of Michael Saylor's Strategy, which has transformed into a Bitcoin investment company.

Bailey raised $200 million through a private placement of new shares and a $100 million convertible bond for a small publicly traded company. The name of the company was not disclosed. People familiar with the matter said the funds will be used to buy Bitcoin.

Bailey is the CEO of BTC, which owns Bitcoin Magazine, Bitcoin Conference and UTXO Management, a cryptocurrency investment company. People familiar with the matter said BTC will eventually merge with the shell company listed on Nasdaq. The company will be renamed Nakamoto in honor of Satoshi Nakamoto, the anonymous creator of Bitcoin, according to one of the people.

Trump gave a major cryptocurrency speech at a Bitcoin conference in Nashville last July. Bailey said he and his team worked with the Trump campaign on cryptocurrency policy and helped with fundraising.

Bailey's deal, which could be announced as early as next week, comes amid a frenzy among investors for publicly traded cryptocurrency acquisition companies, the latest craze in the cryptocurrency market. The complex transaction offers a fast path for cryptocurrencies to enter public markets.

Strategy, the software company that until recently was known as MicroStrategy, pioneered the model when it began buying Bitcoin in the summer of 2020, becoming the world's largest corporate Bitcoin holder. Its stock price subsequently surged 3,100% and traded at twice the value of its Bitcoin holdings, which are valued at $54 billion.

That has set off a rush of companies to launch copycats. Last month, Japanese tech group SoftBank and stablecoin issuer Tether announced the launch of Twenty One, a $3.6 billion bitcoin investment firm, through a merger with a special purpose acquisition company created by Cantor Fitzgerald. Two other companies — Nasdaq-listed real estate platform Janover and consumer goods company Upexi — have transformed into Solana token investments. The companies’ shares have all surged since the announcement.

The stocks are popular with investors because they are a simple way to get exposure to cryptocurrencies without the hassle of holding tokens. Many of the companies issue debt to fund cryptocurrency purchases, effectively using leverage to magnify returns. The scale of their fundraising means they are now competing with crypto venture funds for institutional capital.

“This is becoming a very big trend. It’s almost like the SPAC mania on Wall Street has taken over the crypto space,” said Frank Chaparro, a podcast host and crypto angel investor who has invested in Upexi. One reason these stocks are attractive, he said, is that crypto companies that hold them can get financing more easily because they can use their stock holdings as collateral to get money from banks or traditional prime brokers, which don’t accept crypto as collateral.

But such stocks also come with risks. If the price of bitcoin falls, they could fall more because of the leverage they use. If debt matures and they can’t be refinanced, these companies may be forced to sell their bitcoin or cryptocurrency holdings to repay debt.

Pantera Capital, led by former Tiger Management executive Dan Morehead, is one of the crypto funds betting on such companies. Pantera’s general partner Cosmo Jiang recently made an “eight-figure investment” in Twenty One Capital’s private placement, according to the fund’s general partner Cosmo Jiang. “We’re bullish because we think these are novel companies and there’s clearly strong demand for them in the equity market,” he said.

Stocks like Strategy get an extra boost when they trade at a premium to their underlying assets. That means when they issue shares, they can buy more bitcoin for every dollar raised. “These stocks can trade at a premium because they can increase the amount of bitcoin per share over time,” Jiang said.

The reverse is also true. "If they're trading below the value of their bitcoin, then there could be problems with the business model," said Matthew Siegel, head of digital asset research at VanEck. "They can no longer issue shares at the market price to buy bitcoin." "They're a bit like running a hedge fund inside a public company," he said.

VanEck and Bitwise, two asset managers that issue bitcoin exchange-traded funds (ETFs), are also embracing such investment firms, launching new ETFs that invest in a portfolio of stocks that hold cryptocurrencies as their treasury strategy.

Trump pledged in his Nashville speech to make the United States the "crypto capital of the world" and establish a national strategic bitcoin reserve. He said cryptocurrency rules would be more friendly to the industry.

The cryptocurrency industry was a major donor to Trump's campaign. Trump and his family profited from selling memecoins and setting up a stablecoin that was used by a Middle Eastern sovereign wealth fund for a $2 billion investment, which caused an uproar in Congress.

Upexi CEO Alan Marshall said his company, which was originally in the consumer brands business, decided to pivot to buying Solana this year because the friendly regulatory environment under the Trump administration eliminated the risk of Solana tokens being classified as unregistered securities by the SEC. "That was the final factor that pushed us in this direction," he said. "The new administration cleared the field and you can participate in Solana and other crypto assets without violating securities regulations."

For example, Freight Technologies, a logistics company that facilitates trade between the United States and Mexico, announced last week that it would raise up to $20 million to buy Trump memecoins after Trump announced that he would invite the largest holders of his memecoins to dinner later this month. The company's CEO Javier Selgas said in a press release that his company bought the tokens because he wants to advocate for "fair, balanced and free trade between the United States and Mexico."