Trump's crypto advisor raises $300 million to establish bitcoin investment firm

Author: Yueqi Yang

Translation: Block unicorn

David Bailey, who advised Donald Trump's presidential campaign on cryptocurrency policy during the 2024 election, is raising $300 million to launch a publicly traded bitcoin investment firm, according to people familiar with the matter. Emulating a wave of companies buying digital assets, he aims to replicate the success of Strategy, which has transformed into a bitcoin investment company.

Bailey is raising $200 million through a private placement of new shares and issuing $100 million in convertible bonds for a small publicly traded shell company. The company’s name has not been disclosed. The funds will be used to purchase bitcoin, said the people.

Bailey is CEO of BTC Inc., which owns Bitcoin Magazine, the Bitcoin Conference, and UTXO Management, a cryptocurrency investment firm. BTC Inc. will ultimately merge with this Nasdaq-listed shell company, according to sources. The combined entity will be renamed Nakamoto, one person said, in honor of bitcoin’s pseudonymous creator.

Last July, Trump delivered a major crypto speech at the Bitcoin Conference in Nashville. Bailey said he and his team worked with the Trump campaign to develop its cryptocurrency policy platform and helped raise funds.

Bailey’s deal could be announced as early as next week, amid surging investor enthusiasm for publicly listed crypto acquisition firms—the latest craze in the cryptocurrency market. This complex transaction offers a fast track for crypto to enter public markets.

Strategy (formerly MicroStrategy, a software company) began purchasing bitcoin in the summer of 2020, becoming the world’s largest corporate holder of bitcoin and pioneering this model. Its stock price subsequently surged 3,100%, now trading at twice the value of its bitcoin holdings, which stand at $54 billion.

This sparked a rush among companies to launch copycats. Last month, Japanese tech conglomerate SoftBank and stablecoin issuer Tether announced Twenty One, a $3.6 billion bitcoin investment firm formed via a merger with a SPAC created by Cantor Fitzgerald. Two other companies—Janover, a Nasdaq-listed real estate platform, and consumer goods company Upexi—have pivoted into Solana token investment firms. Since their announcements, both have seen sharp stock gains.

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

"This is becoming a very big trend. It's almost like Wall Street's SPAC frenzy has swept into crypto," said Frank Chaparro, podcast host and crypto angel investor, who backed Upexi. One appealing aspect, he said, is that crypto-holding companies can more easily access financing by using their stock holdings as collateral to borrow from banks or traditional prime brokers—firms that do not accept crypto as collateral.

But these stocks carry risks. If bitcoin prices fall, their declines could be magnified due to leverage. If debt matures and cannot be refinanced, these companies may be forced to sell their bitcoin or crypto holdings to repay obligations.

Pantera Capital, led by former Tiger Management executive Dan Morehead, is one of the crypto funds betting on such companies. According to Pantera managing partner Cosmo Jiang, the firm recently made a "double-digit million" investment in a private placement for Twenty One Capital. "We're bullish because we see these as novel entities, and there's clearly strong demand from equity markets," he said.

Stocks like Strategy gain extra momentum when they trade above their underlying asset value. That means they can buy more bitcoin per dollar raised when issuing shares. "These stocks can trade at a premium because they can increase bitcoin per share over time," said Cosmo Jiang.

The reverse is also true. "If they trade below their bitcoin value, the business model could break down. They can no longer issue shares at market prices to buy more bitcoin," said Matthew Sigel, VanEck's head of digital asset research. "They’re kind of running a hedge fund inside a public company."

VanEck and Bitwise, two asset managers that issue bitcoin exchange-traded funds (ETFs), are embracing these investment firms too, launching new ETFs that invest in baskets of stocks holding cryptocurrencies as part of their strategy.

In his Nashville speech, Trump pledged to make the U.S. the "global capital of cryptocurrency" and establish a national strategic bitcoin reserve. He said crypto regulations would become more industry-friendly.

The cryptocurrency industry has been a major donor to Trump’s campaign. Trump and his family have profited by selling meme coins and launching a stablecoin, which was used by a Middle Eastern sovereign wealth fund for a $2 billion investment—a move that stirred controversy in Congress.

Upexi CEO Alan Marshall said his company, originally in consumer branding, decided this year to shift into buying Solana because the Trump administration's favorable regulatory environment eliminated the risk of the SEC classifying Solana tokens as unregistered securities. "That was the final factor pushing us in this direction. The new administration cleared the field—you can participate in Solana and other crypto assets without violating securities rules," he said.

For example, Freight Technologies, a logistics firm facilitating trade between the U.S. and Mexico, last week announced it would raise up to $20 million to buy Trump-themed meme coins, after Trump revealed he would host a dinner later this month for the largest holders of his meme coin. In a press release, CEO Javier Selgas said his company bought the tokens to advocate for "fair, balanced, and free trade between the U.S. and Mexico."