The financial outlook has been bleak for some time for Digital World Acquisition Corporation, the publicly traded “blank check” shell company trying to merge with Donald Trump’s social media website, but it has only gotten worse. after billionaire investor Elon Musk announced he would go ahead with his deal to buy Twitter.
Musk’s announcement has created even more uncertainty for Digital World ahead of a Monday shareholder meeting that could lead to the dissolution of the special purpose acquisition company (SPAC), which has faced numerous delays in its attempt merger with the parent company of Trump’s Truth Social, a Twitter clone that has been plagued by technical issues and violent content.
Under the terms of its governing documents, Digital World was supposed to have found a company to acquire — and received 65% of shareholder votes for the transaction — by September 20 or liquidate all of its assets.
If approved, the deal would inject more than $1.3 billion into the Trump Media and Technology Group, much-needed cash for the disgraced former president who has struggled to convince mainstream financial institutions to lend him money. money in light of his many failed business ventures and constant lies. .
Digital World executives injected $2.9 million of their own money to delay the termination until December 8. At Monday’s meeting, shareholders will be allowed to vote on whether to extend the life of the company for up to another year.
SPACs have become hugely popular in 2021 as a way for companies to circumvent disclosure regulations that govern traditional initial stock offerings, including those governing foreign investment.
Announced nearly a year ago, the Trump Media-Digital World merger has faced significant hurdles, including a Securities and Exchange Commission (SEC) investigation into whether Digital World executives violated regulations that prevent SPACs from having contact with the companies they want. acquire before their IPO.
In June, Digital World reported that in addition to the SEC investigation, a grand jury convened by the New York federal prosecutor’s office was considering whether Trump unlawfully coordinated with company founder Patrick Orlando before he it is not made public. Prosecutors are also investigating allegations of insider trading involving former Digital World board member Bruce Garelick.
The SEC investigation appears to be based in part on allegations by William Wilkerson, senior vice president of the Trump Media and Technology Group, who filed a whistleblower complaint in August with the agency. In an interview with the Miami Herald, Wilkerson alleged that the ex-president and Orlando deviated from a February 2021 deal to use a pre-existing SPAC, Benessere Capital Acquisition Corp, to buy Trump’s soon-to-be-launched social network. . . This transaction would have been legal since Benessere was already a publicly traded company. Instead, according to Wilkerson, Orlando and Trump decided to create a new SPAC, Digital World.
As of Sunday night, Wilkerson’s account on Truth Social had been set to private, meaning it’s only visible to accounts he also follows.
As the SEC and grand jury investigations into Digital World continued, Trump and the company’s biggest investors grew increasingly nervous. The ex-president blasted the agency in a public statement last month with a typical, unfounded accusation of “political bias.”
Some of Digital World’s early investors have begun withdrawing their funds, including Sabby Management, a secretive hedge fund known to buy stocks deemed overvalued and resell them as their value declines. The investment firm has confirmed to Politico that it has withdrawn its $100 million stake in Digital World.
Sabby Management is one of several companies that have been invited to a special round of investment in Digital World, which has given them significantly lower purchase prices at a time when the stock was trading at over $90 a day. stock.
Beyond the potentially deadly SEC investigation, Trump Media and Technology Group has suffered other setbacks, including allegations from its web hosting provider that the Truth Social network owed more than $1.6 million. in unpaid service charges. The US Patent and Trademark Office denied Truth Social’s trademark application in August, and the site has seen a decline in viewership since its initial launch in February.
As the difficulties continue to mount, Trump has speculated that he may refuse to merge his little-used Twitter clone with Digital World.
“If they don’t come up with the funding, I’ll keep it private,” Trump told supporters at an Oct. 1 campaign rally in Michigan.
Trump’s restless user content site is one of many Twitter clones that have sprung up as far-right Republicans, including the ex-president, have complained that their efforts to promote misinformation and violent rhetoric have not been allowed by mainstream social media platforms such as TikTok, Facebook and Twitter.
Musk’s announcement that he will move forward with the Twitter acquisition has created uncertainty for his MAGA impersonators as the Tesla CEO has repeatedly said he favors content moderation much more permissive and that he would likely overturn Trump’s lifetime Twitter ban, which he instituted after inciting a violent mob of his followers to attack the US Congress.
Probably aware that a troll-friendly Twitter would mean fewer visitors to Truth Social, the ex-president said in April that he would not return to Twitter even if his account was reinstated.
Trump attacked Musk at a July campaign rally in Alaska, calling Musk a “bullshit artist” who took a “rotten deal” to buy Twitter. Musk fired back saying he believed Trump should retire from pudlic life and was too old to be president.
In an interview with the Financial Times published on Friday, Musk called Truth Social a “right-wing echo chamber” that “might as well be called Trumpet.” Trump has yet to comment on Musk’s renewed interest in buying Twitter.
Trump did not respond to Orlando’s repeated efforts on Truth Social to get the former president to encourage his supporters who own Digital World stock to vote to extend the life of the company. Ahead of Monday’s meeting, Orlando even used a QAnon broadcast to reach out to its shareholders.
Shares of Digital World were selling for $17.06 in after-hours trading on Friday, down from the $22.13 they sold on September 7, and well off their high of $97.54 since the beginning of the year.
TYT National Correspondent Matthew Sheffield reports on politics, media and technology. Follow him on Twitter: @mattsheffield.