Trump's encryption advisor raises 300 million to establish a Bitcoin investment company

Author: Yueqi Yang; Translated by: Block unicorn

According to sources, David Bailey, who provided cryptocurrency policy advice to President Donald Trump during the 2024 campaign, is raising $300 million with plans to launch a publicly traded Bitcoin investment company. He is following a series of companies that have purchased cryptocurrency, attempting to replicate the success of Michael Saylor's strategy, who has transitioned into a Bitcoin investment firm.

Baili raised $200 million through a private placement of new shares and issued $100 million in convertible bonds for a small publicly listed company. The name of the company has not been disclosed. According to insiders, the funds will be used to purchase Bitcoin.

Bailey is the CEO of BTC Company, which owns Bitcoin Magazine, the Bitcoin Conference, and UTXO Management, a cryptocurrency investment firm. According to insiders, BTC Company will ultimately merge with this publicly traded shell company listed on Nasdaq. One of the sources revealed that the company will be renamed Nakamoto in honor of Bitcoin's anonymous creator, Satoshi Nakamoto.

Trump delivered an important cryptocurrency speech at the Bitcoin conference in Nashville last July. Bailey stated that he and his team collaborated with Trump's campaign team to formulate cryptocurrency policies and assisted in fundraising.

Belly's deal may be announced as early as next week, amidst a frenzy of investors acquiring publicly listed cryptocurrency companies, which is the latest craze in the cryptocurrency market. This complex transaction provides a fast track for cryptocurrency to enter the public market.

Strategy (formerly known as the software company MicroStrategy) began purchasing Bitcoin in the summer of 2020, becoming the world's largest corporate Bitcoin holder and pioneering this model. Its stock price subsequently soared by 3100%, trading at twice the value of its held Bitcoin, which is valued at $54 billion.

This has sparked a rush among companies to launch imitators. Last month, Japanese tech giant SoftBank and stablecoin issuer Tether announced the launch of Twenty One, a $3.6 billion Bitcoin investment company, through a merger with a special purpose acquisition company created by Cantor Fitzgerald. Two other companies—the Nasdaq-listed real estate platform Janover and consumer goods company Upexi—have transformed into Solana token investment firms. Since the announcement, the stock prices of these companies have surged significantly.

These stocks are popular with investors because they provide a simple way to gain exposure to cryptocurrencies without the hassle of holding tokens. Many companies issue debt to fund cryptocurrency purchases, effectively using leverage to amplify returns. Their fundraising scale means they are now competing with cryptocurrency hedge funds for institutional capital.

"This is becoming a very big trend. It's almost like the SPAC frenzy on Wall Street has swept into the cryptocurrency space," said podcast host and cryptocurrency angel investor Frank Chaparro, who has invested in Upexi. He stated that one reason these stocks are attractive is that cryptocurrency companies holding these stocks can obtain financing more easily, as they can use their stock holdings as collateral to secure funds from banks or traditional major brokers, which do not accept cryptocurrencies as collateral.

However, these types of stocks also carry risks. If the price of Bitcoin declines, their losses may be greater due to the use of leverage. If debts come due and cannot be refinanced, these companies may be forced to sell their holdings of Bitcoin or cryptocurrencies to repay their debts.

Pantera Capital, led by former Tiger Management executive Dan Morehead, is one of the cryptocurrency funds betting on such companies. According to Pantera's general partner Cosmo Jiang, the fund recently made an "eight-figure investment" in the private placement of Twenty One Capital. "We are optimistic because we believe these are novel companies, and there is clearly strong demand from the equity markets," he said.

Stocks like Strategy gain additional momentum when their trading price is above their underlying assets. This means that when they issue shares, they can purchase more Bitcoin for every dollar raised. Cosmo Jiang said, "These stocks can trade at a premium because they can increase the Bitcoin per share over time."

The same is true in reverse. Matthew Sigel, head of digital asset research at VanEck, stated, "If their trading prices are below their Bitcoin value, then the business model may have issues. They can no longer issue shares at market prices to buy Bitcoin." He said, "They are somewhat like operating a hedge fund within a listed company."

VanEck and Bitwise are two asset management companies that issue Bitcoin exchange-traded funds (ETF). They are also embracing this type of investment company by launching new ETFs that will invest in a basket of stocks holding cryptocurrencies as part of their financial strategy.

In a speech in Nashville, Trump promised to make the United States the "global cryptocurrency capital" and to establish a national strategic Bitcoin reserve. He stated that cryptocurrency regulations will be more friendly to the industry.

The cryptocurrency industry is a major donor to Trump’s campaign. Trump and his family profit from selling meme coins and establishing stablecoins, which are used by a Middle Eastern sovereign wealth fund for a $2 billion investment, causing an uproar in Congress.

Upexi CEO Allen Marshall stated that his company was originally engaged in the consumer brand business, but this year decided to shift towards purchasing Solana, as the friendly regulatory environment under the Trump administration has eliminated the risk of Solana tokens being classified as unregistered securities by the SEC. He said, "This was the final factor driving us in this direction. The new government cleared this area, allowing you to participate in Solana and other cryptocurrency assets without violating securities regulations."

For example, Freight Technologies, a logistics company facilitating trade between the United States and Mexico, announced last week that it would raise up to $20 million to purchase Trump meme coins, following Trump's announcement that he would invite the largest holders of his meme coins to dinner later this month. The company's CEO Javier Selgas stated in a press release that his company's purchase of these tokens is because he hopes to advocate for "fair, balanced, and free trade between the United States and Mexico."