According to a filing with the SEC, Digital World Acquisition Corp. suffered a loss of $139 million in investment commitments as a result of the most recent difficulties experienced by Trump’s social media platform.
The firm meant to merge with Donald Trump’s Truth Social to take it public is receiving the further bad news that investors are starting to abandon ship.
The previous month, a significant supplier voiced concern that Truth Social was not paying its invoices. In a report by Fox Business News, a major web-hosting operator claimed that Truth Social owes over $1.6 million in legally required payments. This allegation suggests that the company’s finances are in “serious disarray.”
Another setback occurred when an application for a trademark submitted by Truth Social was rejected a month ago because the company’s name was too similar to that of other businesses.
Special Purpose Acquisition Company (SPAC) that would tie Truth Social to Digital World Acquisition Corp. (DWAC) has been buffeted with only bad news after the FEC investigated the deal. The Truth Social app has been removed from Google Play. Despite Trump being the main attraction, enrollment on the site has stagnated. Trump started the Truth Social app because he was banned from Twitter, Facebook, and other social media sites. The FEC investigation, the app ban, and the enrollment stall all occurred after an announcement that the deal would be investigated.
The FEC filing reveals an estimated 139 million dollars worth of anticipated financing has been canceled. In addition, the deal between the special purpose acquisition company (SPAC) and Trump Media and Technology Group (TMTG), which owns Truth Social, has been on hold due to civil and criminal probes around the agreement.
According to reports, the most damaging blow came from one investor.
Sources told Reuters that Sabby Management, which had committed $100 million to the PIPE, is one of the investors who has terminated their agreement. The report hinted that more investors are expected to withdraw in the coming weeks now that a deadline on September 20 has passed with little movement.
Digital World did not reveal the names of the investors who withdrew their funds. According to the sources, other investors may opt out in the next few weeks because they can discontinue their participation after the deadline. The reports added that many people are waiting for DWAC to provide more favorable conditions to the PIPE investors.
According to the filing, TMTG needs millions of people to register and regularly use its platform in order to succeed. In the event President Trump loses popularity, or there are further controversies that damage his credibility, the planned merger with Digital World may be adversely affected.
The SPAC had expected that the United States Securities and Exchange Commission, which is now investigating the disclosures made by Digital World on the transaction, would have given its approval by this point. Following the failure of its attempt to secure a 12-month extension from its shareholders, Digital World said this month that it would instead prolong the duration of the arrangement by three m