Donald Trump’s new media group is already drawing scrutiny from federal securities regulators, just months after its launch.
According to a Securities and Exchange Commission (SEC) filing from Digital World Acquisition Corp. (DWAC), which is seeking to acquire Trump Media & Technology Group (TMTG), the company received “certain preliminary, fact-finding inquiries” from the Financial Industry Regulatory Authority in October. It also received a “voluntary information and document request from the SEC” in November. DWAC is a special purpose acquisition company (SPAC), sometimes called a “blank check” acquisition firm, that is attempting to merge with TMTG to bring it to the stock market.
In November, Sen. Elizabeth Warren (D-Mass.) urged the SEC to investigate the merger for potential securities violations. Warren wrote in a letter to the SEC commissioner stating that Trump’s company “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”
DWAC wrote in its recent filing that it is “cooperating” with the inquiry but stated that the SEC “investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security.”
Trump formally launched Truth Social on Oct. 20, but the platform was quickly called out for violating its software agreement and went dark. Before that happened, users learned that the site had some interesting terms and conditions they needed to follow, including agreeing that they would not make fun of Truth Social. Trump seems to have launched the social media company in part because he lost his direct line to supporters when he was permanently banned from Twitter and suspended from Facebook after Jan. 6
Trump hopes that this new company will rival the existing social media giants of big tech. This past weekend, TMTG claimed that it had raised $1 billion in capital from unidentified institutional investors. “One billion dollars sends an important message to Big Tech that censorship and political discrimination must end,” Trump said in a statement announcing the investment. “As our balance sheet expands, Trump Media & Technology Group will be in a stronger position to fight back against the tyranny of Big Tech.”
In its filing to the SEC, DWAC predicted Truth Social’s user base would reach 81 million by 2026, claiming that the estimate is “based on the results of a 2021 Politico poll of registered voters.” But 81 million is significantly more votes than Trump received in the 2020 election (74.2 million), and according to the Politico/Morning Consult poll cited by TMTG, only 60 percent of Trump voters said they would use Trump’s new social site “at least some of the time.” While it’s unclear where the 81 million figure is coming from, it is close to the 88 million followers Trump had before he was booted from Twitter. Even so, it’s a pretty lofty goal considering Facebook only acquired 50 million users within its first five years in operation.
Meanwhile, Truth Social remains dark.