The Major Bitcoin Warning Hidden In Trump Media’s Earnings

Topline

Trump Media & Technology Group reported second-quarter results showing $238 million in losses, the majority of which the Truth Social parent attributed to digital assets, but a footnote in a regulatory filing warned of potentially significant losses ahead.

Key Facts

Trump Media, in a Securities and Exchange Commission filing on Monday, disclosed a new risk factor absent from the firm’s prior filing, warning the firm had deployed some of its bitcoin holdings to third parties to generate additional income, exposing the assets to lending risks that could result in losses.

The filing warns the third parties handling Trump Media’s bitcoin may not have established credit ratings and could lend or pledge the assets to other firms, with no government insurance protecting Trump Media from losses if the counterparty fails or goes bankrupt.

Trump Media changed how it described income from selling bitcoin options, indicating it would now be paid in cash or, when a deal is completed, in bitcoin, after its first-quarter filing said those payments would be “immediately paid in cash.”

The second-quarter filing explicitly names FTX, Celsius, Voyager and BlockFi as cautionary examples, warning if a third party holding its bitcoin goes bankrupt, Trump Media’s cryptocurrency could become part of its bankruptcy estate and the firm would be left with “limited or no recovery.”