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The company behind Donald Trump’s social network Truth Social is said to take in over a billion dollars via the stock exchange. But now the construct collapses.
After Donald Trump was banned from all major social media platforms in the wake of the storming of the US Capitol on January 6, 2021, he set regarding building his own stage. This is called Truth Social and was launched in the USA in the spring. However, Truth Social is still a long way from serious competition for Twitter, Facebook and Co.
Truth Social is operated by Trump Media & Technology Group (TMTG), a start-up founded by Trump. But most of the money to run the site would come from a second company, Digital World Acquisition Corporation (DWAC). This is a so-called SPAC, a construct that was particularly popular in the stock market boom of recent years.
US authorities are looking closely
SPACs are basically empty corporate shells that raise money in the stock market. The aim is to merge with a previously unlisted company, in this case TMTG. DWAC took in 1.3 billion dollars, which were actually intended for the operation of Truth Social.
But the merger between DWAC and TMTG is faltering, as several US authorities are targeting DWAC for alleged violations of financial market laws. If the merger is not completed within a specified time, DWAC must dissolve under its own policies.
Trump fans overwhelmed with voting rights
Therefore, the company management is now trying to extend this deadline. The problem: 65 percent of the shareholders* have to explicitly agree to the project. But many of the shares are in the hands of private investors, often Trump fans, who either know nothing regarding the vote or are overwhelmed with the not uncomplicated exercise of voting rights.
If this qualified majority does not come regarding, Digital World should actually be liquidated. Until the original deadline last Tuesday, this majority was not in sight, which is why the vote was postponed to today, Thursday, as the “Washington Post” reported.
Bills are not paid
The company management can arbitrarily postpone the dissolution by another six months, but then the existing investors would have to inject millions once more with no concrete prospect of seeing them once more at some point.
The money store, which was already in sight, is now disappearing into thin air before the eyes of TMTG and Truth Social. Providers of server services for Truth Social are already accusing the company of not paying bills – a well-known pattern among Trump’s numerous companies. The money problems don’t seem to bother him much. “I’m really rich” posted the ex-president on Truth Social.