Trump Finding It Difficult To Finance Truth Social After Merger Hits Snag?

Digital World Acquisition Corporation that's planning to buy former U.S. President Donald Trump’s new social media business has disclosed a federal grand jury probe.

It said that the investigation could impede or even prevent its acquisition of Trump's Truth Social app, reported TIME. The disclosure of the ​​U.S. federal grand jury issuing subpoenas to the board members of the company was made on Monday. Following the disclosure, shares of the company dropped 10% in morning trading Monday.

The new investigation could make it more difficult for Trump to finance his social media company, which last year got promises from several investors to pump $1 billion into the business. But it can’t get the money until the Digital World acquisition is completed.

The probe is the latest blow to the former President's plans to take Trump Media & Technology Group (TMTG), which is the creator of Truth Social, public, reported The Guardian. Last October, TMTG agreed to merge with Digital World. It was expecting the deal to close by the second half of 2022.

The merger is being investigated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority.

Digital World Acquisition Corporation is a special purpose acquisition company (SPAC), which is a blank cheque business created to go public and then find a firm to merge with. Such companies are not supposed to have a deal lined up before they go public. The investigation by SEC is about whether or not Digital World and Trump's company held serious talks before the SPAC went public in September 2021. If so, then why those discussions were not disclosed in regulatory filings.

Bruce Garelick, chief strategy officer of investment firm Rocket One Capital was resigning from the board, said Digital World. Some of the information asked by the grand jury was related to communications with Rocket One Capital.

TMTG said that they will "cooperate with oversight that supports the SEC’s important mission of protecting retail investors."

Trump's social media company was launched to the public in February on the App Store, but many had issues with getting into the app, reported TechCrunch. The waitlists were going up to 100,000 users at the time. In May, a web app was launched, but an Android version is yet to be in sight.