A “blank check” shell company that saw its value skyrocket after announcing plans to merge with former president Donald Trump’s planned social media startup is now under investigation by two separate financial regulators.
Mr Trump announced the upcoming launch of the startup – Truth Social – on 20 October as part of a new company called the Trump Media and Technology Group, which he said would merge with Digital World Acquisition Corporation, which is a SPAC, or Special Purpose Acquisition Company.
Shares for DWAC, which is listed on the Nasdaq stock exchange, had traded at roughly $10 per share before the announcement, but jumped more than tenfold in the days following the announcement.
But in a 6 December filing with the Securities and Exchange Commission, representatives of DWAC revealed that SEC officials have asked the company for “documents relating to meetings of DWAC’s Board of Directors, policies and procedures relating to [stock] trading, the identification of banking, telephone, and email addresses, the identities of certain investors, and certain documents,” as well as communications between DWAC executives and representatives of Trump Media and Technology Group.
DWAC also reported that representatives from the Financial Industry Regulatory Authority, a private self-regulator of brokerage firms and exchange markets, has also contacted the company to request information about trading of the company’s stock in the days prior to Mr Trump’s 20 October announcement.
Mr Trump’s planned social network, which does not yet exist, would be one of a number of alternatives to mainstream platforms such as Twitter and Facebook, both of which banned him in the wake of the 6 January insurrection for inciting violence, though Facebook’s independent oversight board later clarified that his ban could be lifted after two years.
Supporters of the twice-impeached ex-president have started other alternative Twitter knockoffs in hopes of attracting conservative users who bristle at “big tech” policies banning hate speech, harassment, and misinformation.
Two of the more prominent examples, Gab and Parler, have both been used for planning of violent events, with the latter figuring prominently in Trump supporters’ preparations to attack the Capitol on 6 January, and the former being used by the perpetrator of the 2018 mass shooting at the Pittsburgh, Pennsylvania Tree of Life Synagogue.
The company also plans to offer subscriptions for what a proposal document meant for potential investors described as “non-woke entertainment,” as part of a streaming video service with “documentaries, podcasts, and more”.
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