A federal grand jury probe that the company hoping to purchase Donald Trump’s new social media company claims could obstruct or even prevent its acquisition of the Truth Social app has been made public.
As soon as Digital World Acquisition Corp. disclosed that a grand jury in New York had issued subpoenas to the company, its shares fell by about 10%.
The Securities and Exchange Commission is currently looking into whether or not Digital World violated any laws when it began serious negotiations to acquire Trump’s business at the beginning of last year. This was done before Digital World began selling stock to the general public in September, just weeks before it made the announcement that it would be purchasing Trump’s business.
A year after being barred from Twitter, Facebook, and YouTube, Trump’s social media project was established in February as he looked for a new digital platform to mobilise his fans and battle speech restrictions imposed by Big Tech.
In a statement, the Trump Media & Technology Group—which runs the Truth Social app and was in the process of being acquired by Digital World—said that it will assist with “oversight that supports the SEC’s essential purpose of protecting retail investors.”
The latest investigation may make it more challenging for Trump to obtain funding for his social media business. Numerous investors pledged to spend $1 billion in the company last year, but the money won’t be available until the Digital World deal is finalised.
After the announcement of its agreement to acquire Trump’s business, the price of Digital World’s stock shot up to more than $100 in October. Monday’s stock market close was $25.16.
A special-purpose acquisition company, or SPAC, called Digital World is a participant in the investing craze that has risen in prominence over the past two years.
Such “blank-check” businesses are inactive corporate entities that solely promise investors that they would one day purchase a company. So long as they haven’t previously identified potential acquisition targets, they are permitted to immediately offer stock to the public without the regular regulatory disclosures and procedures.
The Southern District of New York grand jury has subpoenaed every member of Digital World’s board of directors, the company revealed in a regulatory filing on Monday. A variety of papers related to the company and other parties, such as a sponsor, ARC Global Investments, and Miami-based venture capital firm Rocket One Capital, are also being sought by the grand jury and the SEC.
According to the SEC report, some of the requested records relate to “due diligence” about Trump Media and other potential acquisition targets, as well as communications with Digital World’s underwriter and financial adviser in its IPO.
Additionally on Monday, Bruce Garelick, the chief strategy officer at Rocket One, resigned from his position as a member of Digital World’s board.
Aryan Jakhar works as an Editor-in-Chief at The Shining Media. Also, he is an editor at YouthPolitician (digital media situated in Taiwan). He writes his opinions on social issues at YouthKiAwaaz and also on his blogger website.