Donald Trump’s 'Truth Social' app faces fresh legal scrutiny, stocks tumble

Donald Trump's new social media business ‘truth Social’ has been involved in a federal grand jury investigation seeking the financial dealings of the shell company Trump Media & Technology Group that his new venture intends to merge with. This could impede or hamper the acquisition of the Truth Social app, the company planning to buy Donald Trump’s social media app said in a statement.

The stocks of the Digital World Acquisition Corp. dropped 10% shortly after the firm revealed that it has received a series of subpoenas from a grand jury in New York. These were issued by the Justice Department in relation to a probe launched by US Securities and Exchange Commission, according to the SEC filing. 

Digital World Acquisition Corp. (DWAC) said in an SEC filing that the company “became aware that a federal grand jury sitting in the Southern District of New York has issued subpoenas to each member of Digital World’s board of directors.”

SEC’s investigation could 'materially delay' SPAC deal with Trump’s company

The Department of Justice and the SEC’s investigation could now “materially delay” or “prevent the consummation of” the SPAC deal with Trump’s company, the DWAC iterated in the filing. SEC meanwhile sought “various documents and information regarding, among other things, Digital World’s due diligence regarding TMTG, communications regarding and due diligence of potential targets other than TMTG, relationships between and among Digital World (and/or certain of Digital World’s officers and directors) and other entities (including ARC Global Investments II LLC, Digital World’s sponsor, and certain advisers, including Digital World’s underwriter and financial advisor in its initial public offering),” the DWAC filing revealed. 

Trump launched Truth Social earlier last year in February, as he sought to compete with tech giants Twitter and Facebook where he was banned and questioned the freedom of speech. Trump Media & Technology Group which operates the Truth Social app was in the process of being acquired by Digital World. The deal would generate up to $1.3 billion in capital.

 In a statement, the firm said that it will cooperate with “oversight that supports the SEC’s important mission of protecting retail investors.” Its shares skyrocketed to a whopping $100 in October 2021 after a deal to buy Trump’s company was made public. The stocks on Monday traded at just $25.