Trump Media & Technology Group (DJT) bought 4,359 bitcoin in the third quarter, bringing its holdings to 15,649 as of Sept. 30. But nearly all of those assets are tied to collateral or other arrangements, leaving the company with little bitcoin it can freely use as a $1 billion cash payment deadline approaches.
Chief Financial Officer Phillip Juhan said on the company's earnings call Monday that the purchases were funded by selling shares of BlackRock's iShares Bitcoin Trust (IBIT). The company's disclosures show that its reported bitcoin holdings are not equivalent to an unrestricted reserve.
More than 11,000 bitcoin tied to an options arrangement
Trump Media's quarterly filing says 11,385.20 bitcoin were pledged under an options arrangement. The filing says the counterparty may lend those bitcoin onward, meaning the pledged assets could be subject to contract terms and are not freely available for the company to dispose of.
A further 4,260.73 bitcoin were pledged as collateral for the company's zero-coupon convertible notes. The debt can be converted into company shares under specified conditions. The bitcoin will remain encumbered until the loan conditions are met or until May 2028. Last week, about 4,259 bitcoin were transferred to Crypto.com, a figure close to the amount pledged for the notes.
Together, the two arrangements cover 15,645.93 bitcoin. Compared with the company's reported total of 15,649, that leaves roughly three bitcoin outside the disclosed collateral arrangements. The amount actually available for use may depend on the contracts and the assets' status.
$1 billion cash payment deadline falls on Nov. 30
The company also faces a cash payment deadline involving noteholders: they can require Trump Media to pay $1 billion in cash on Nov. 30. The deadline has drawn attention to the relationship between the bitcoin collateral arrangements and the company's near-term funding needs. The information disclosed does not specify how the company plans to meet the cash demand or provide a financing or repayment plan.
The quarterly filing also warns that some counterparties could sell pledged bitcoin without prior notice if the company fails to meet margin calls. The collateral could therefore be subject to disposal not only under repayment terms, but also under margin requirements.
The third-quarter bitcoin purchases took place before public comments related to Oct. 30. The balance-sheet issue is that Trump Media reported more than 15,000 bitcoin, while almost all of that amount is tied to the options arrangement or debt collateral. The Nov. 30 cash deadline puts the company's available liquidity and its collateral commitments in focus.