Trump Media & Technology Group

Trump Media & Technology Group (TMTG), also known as T Media Tech LLC,^[2] is an American media and technology company founded in 2021 by former U.S. president Donald Trump.^[3][4] In October 2021, the company announced a proposed merger agreement with Digital World Acquisition Corp. (DWAC), a publicly traded special-purpose acquisition company intended to take TMTG public through an initial public offering. The merger had not been completed by August 2023, and two months later DWAC disclosed it was refunding the $1 billion it had raised from investors for TMTG.^[5][6]

Trump Media & Technology Group

Type	Private
Industry	Media Technology Social media
Founded	February 2021; 2 years ago (2021-02)
Headquarters	Palm Beach, Florida, US
Key people	Donald Trump (Founder, Chairman)^[1] Devin Nunes (CEO)
Products	Truth Social, TMTG+ TMTG News
Website	www.tmtgcorp.com

Trump owned about 90% of the company in April 2023. Since January 2022, former U.S. representative Devin Nunes has served as the company's chief executive officer. In February 2022, TMTG launched the social network Truth Social. Trump reported in an April 2023 personal financial disclosure that he had made less than $201 from TMTG.^[7]

A November 2023 DWAC financial disclosure indicated TMTG had generated losses such that management had "substantial doubt" about its ability to pay its bills, and the company's accounting firm had "substantial doubt" about the company's ability to remain in business.^[8][9][10]

Operations

Incorporated in February 2021,^[3] Trump Media & Technology Group intended to use a special-purpose acquisition company (SPAC) to facilitate its becoming a publicly traded company. On October 20, 2021, TMTG and Digital World Acquisition Corp. (DWAC), a publicly traded SPAC, announced that they had entered into a definitive merger agreement that would combine the two entities, allowing TMTG to become a publicly traded company. DWAC was created with the help of ARC Capital, a Shanghai-based firm specializing in listing Chinese companies on American stock markets that has been a target of U.S. Securities and Exchange Commission (SEC) investigations for misrepresenting shell corporations.^[11][12][13] Some investors were surprised to learn that their investment money was being used to finance a Trump company.^[14] In 2021, the DWAC Trump venture was linked with another company, China Yunhong Holdings, based in Wuhan, Hubei,^[15][16] until its lead banker who was running the merger promised to sever ties with China in December 2021, stating that Yunhong was to "dissolve and liquidate".^[17][18] In February 2022, Reuters reported that the connection between Shanghai-based ARC Capital and Digital World was more extensive than thought, with ARC having offered money to get the SPAC off the ground.^[18]

The company's announced future product offerings include a social network (Truth Social) and on-demand programming (TMTG+).^[19]

In December 2021, TMTG said it had raised $1 billion in private investment in public equity (PIPE) funding. The investors are unidentified. The Financial Times reported the expected proceeds of the PIPE and SPAC funding to TMTG would be $1.25 billion.^[20]

On December 14, 2021, TMTG announced that it had entered into a "wide-ranging technology and cloud services agreement" with video platform Rumble, and that Rumble would operate part of the Truth Social network as well as TMTG+.^[21][22]

On January 1, 2022, Devin Nunes (R-CA) resigned his seat from the U.S. House of Representatives to become the company's chief executive officer.^[23][24]

In August 2022, DWAC secured shareholder approval for four three-month extensions to close the deal, deferring shareholder meetings until September 8, 2023. The firm needs to close the deal by that date, or have 65% of shareholders approve another extension, or face liquidation.^[25] Shareholders approved a one-year extension on September 5.^[26]

In March 2023, Digital World Acquisition fired its CEO Patrick Orlando.^[27]

DWAC disclosed in an October 2023 regulatory filing that after investors had canceled $467 million of their commitments, the firm would return the remaining $533 million of the $1 billion it had raised.^[28]

A November 2023 DWAC financial disclosure showed TMTG's accounting firm raised "substantial doubt as to its ability to continue as a going concern" and company management "has substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due." The disclosure showed that since the company's inception through June 2023 TMTG had lost $31.5 million.^[29]

On November 21, 2023, Trump Media & Technology Group, filed a lawsuit seeking $1.5 billion in damages from 20 media outlets. The lawsuit, filed in Sarasota County, Florida, alleges that these outlets falsely reported that Truth Social had incurred a $73 million loss, which the company claims was an "utter fabrication" and part of a "deliberate, malicious, and coordinated attack.". The error reportedly arose from misinterpreting a regulatory filing, leading some outlets, including Reuters, to issue corrections. The lawsuit suggests that the simultaneous reporting of the incorrect figure by all 20 outlets indicates a coordinated campaign against Truth Social.^[30]

Truth Social

Main article: Truth Social

On February 21, 2022, TMTG released Truth Social, a competitor to platforms such as Twitter, on iOS. Truth Social faced staffing issues due to its political associations, and in early April 2022, Reuters reported that the company's head of technology and head of product development had resigned their posts following the network's "troubled" launch.^[31]

After Elon Musk disclosed his large stake in and intent to buy out Twitter in April 2022, holding company DWAC lost 44% of its stock value. Matthew Kennedy, a market strategist at Renaissance Capital, said that the buyout was troubling for Digital World as a Musk-owned Twitter would undercut the rationale behind Truth Social's existence.^[32]

On April 22, 2022, Rumble announced that Truth Social had successfully migrated its website and mobile applications to Rumble's cloud infrastructure.^[4]

Legal issues

Investigation of illegal trading

On June 29, 2023, three people were arrested on charges that they had illegally traded DWAC based on nonpublic knowledge before the proposed merger was announced in 2021.^[33]

Background

The founder of the DWAC SPAC, Miami banker Patrick Orlando, had been discussing the deal with Trump since at least March 2021, as The New York Times reported days after the TMTG deal was announce. This may have skirted securities laws and stock exchange rules, since SPACs are not allowed to have a target company in mind prior to going public. The formation of the SPAC was announced in May 2021 and it was taken public that September. By mid-2021, people affiliated with TMTG were telling Wall Street investors that the company was nearing a deal to merge with a SPAC. Trump and Orlando had initially discussed a deal through another of Orlando's SPACs that was already publicly traded, but it was deemed too small for the Trump deal. Deal discussions could have been proper when the first SPAC was being considered but improper after the SPAC was formed. DWAC stated in three prospectuses that it had not had "any substantive discussions, directly or indirectly, with any business combination target."^[34]

Orlando's stake in DWAC increased by $420 million from the original $3 million he invested.^[35]

In late 2021, the SEC and the Financial Industry Regulatory Authority asked DWAC for information about stock trading and communications with TMTG prior to their deal being announced. (DWAC disclosed this request in a December 2021 regulatory filing.)^[36][37] The company disclosed in June 2022 that the SEC was expanding its inquiry, and days later said a grand jury seated by the U.S. Attorney for the Southern District of New York (SDNY) had subpoenaed DWAC and each member of its board, as well as documents.^[38][39]

On July 3, 2023, DWAC announced its intent to settle by paying an $18 million fine to the SEC and revising some of its filings.^[40] On July 20, the SEC announced the settlement.^[41]

Trump's role

The Sarasota Herald-Tribune reported in July 2022 that according to Florida state records, Trump left as chairman of TMTG less than a month before the company received subpoenas from the SEC and the New York grand jury, concurrent with the DWAC subpoenas. His son Donald Trump Jr. and former Trump administration official Kash Patel were among others who simultaneously left the TMTG board of directors. Truth Social denied the report. Axios later published records filed by TMTG's agent with the Florida Division of Corporations; an April 28 filing showed Trump and others listed as "director," while a June 8 filing to change "person, title or capacity" directed the Division to "remove" Trump and others.^[42][43][44]

Investigation of money laundering

The Guardian reported in March 2023 that in 2022 the SDNY expanded its criminal investigation to include whether TMTG engaged in money laundering. Beginning in December 2021, when the company was in danger of collapsing because its merger with DWAC had been delayed, it received a loan in two payments totaling $8 million. This included $2 million from Paxum Bank, which is part-owned by Anton Postolnikov, a relation of Aleksandr Smirnov, a former Russian government official who now runs the Russian maritime company Rosmorport. Another $6 million was paid by an ostensibly separate entity, ES Family Trust, which shared a director with Paxum Bank.^[45][46] The $8 million loan was structured to automatically convert into TMTG common equity upon merging with the SPAC—meaning ES Family Trust will gain a stake in TMTG if the merger proceeds—though this was not disclosed to the SPAC investors nor the SEC.^[47]

Notable stockholders

In October 2021 it was reported, based on information provided by congresstrading.com, that House representative Marjorie Taylor Greene (R-GA) had purchased between $15,000 and $50,000 DWAC shares after the Trump merger was announced.^[48][49][50]

References

1. "Press Release". Trump Media & Technology Group. 20 October 2021. from the original on 22 October 2021. Retrieved 22 October 2021.
2. "T Media Tech LLC". Apple Store. Retrieved 31 October 2021.
3. "TRUMP MEDIA GROUP CORP. :: Delaware (US)". opencorporates.com. Retrieved 26 April 2022.
4. "Exhibit 99". Archives. Securities and Exchange Commission. 20 October 2021. from the original on 22 October 2021. Retrieved 22 October 2021.
5. Harwell, Drew (2 September 2023). "Trump's Truth Social facing a key funding deadline". The Washington Post.
6. Coster, Helen (12 October 2023). "SPAC to return remaining $533 million raised for Trump social media deal". Reuters.com. Reuters. Retrieved 13 October 2023.
7. Price, Michelle L. (14 April 2023). "Trump reports little income from Truth Social, $1M from NFTs". Associated Press.
8. "Trump's Truth Social reports $73 mln net loss since launch". Reuters. 14 November 2023. Retrieved 14 November 2023.
9. Weprin, Alex (13 November 2023). "Trump's Truth Social Has Lost $73M Since Launch, New Filing Shows". The Hollywood Reporter. Retrieved 14 November 2023.
10. . www.sec.gov. 13 November 2023. Archived from the original on 14 November 2023. Retrieved 14 November 2023.
11. "Trump announces launch of media company, social media site". AP News. 21 October 2021. from the original on 21 October 2021. Retrieved 31 October 2021.
12. Goldstein, Matthew; Hirsch, Lauren; Enrich, David (29 October 2021). "Trump's $300 Million SPAC Deal May Have Skirted Securities Laws". The New York Times. Retrieved 31 October 2021.
13. Douglas MacMillan; Jonathan O'Connell (23 December 2021). "Trump's newest business partner: A Chinese firm with a history of SEC investigations". The Washington Post.
14. Enrich, David; Goldstein, Matthew; Goldmacher, Shane (21 October 2021). "Trump Takes Advantage of Wall Street Fad to Bankroll New Venture". The New York Times.
15. Feng, John (22 October 2021). "How Donald Trump's Truth Social is connected to China". Newsweek. Retrieved 3 August 2022.
16. "Trump's new social media backer tied to China lifestyle venture". www.aljazeera.com. Al Jazeera. Retrieved 3 August 2022.
17. Feng, John (8 December 2021). "Patrick Orlando, bankroller of Donald Trump's Truth Social, Severs China Connections". Newsweek. Retrieved 14 August 2022.
18. Wang, Echo; Berens, Michael (10 February 2022). "How a Trump deal got a boost from a China-based financier". Reuters. Retrieved 14 August 2022. The initial investors in the management entity, or sponsor, of Digital World put in a total of $11.8 million, disclosures show. / The Washington Post and Bloomberg News previously reported that ARC has a stake in the sponsor of Digital World. The fact that ARC offered money to get the SPAC off the ground is reported here for the first time.
19. "Company Overview". www.tmtgcorp.com. from the original on 21 October 2021. Retrieved 21 October 2021.
20. Asgari, Nikou; Indap, Sujeet (4 December 2021). "Donald Trump's social media start-up raises $1bn". Financial Times. Retrieved 4 December 2021.
21. "Former Trump, Nunes Aide Lands Top Legal Job at Rumble Platform". Bloomberg Law. 9 December 2021.
22. Schnell, Mychael (14 December 2021). "Trump media company inks deal with video platform Rumble". The Hill. Retrieved 14 December 2021.
23. Nobles, Ryan (6 December 2021). "Devin Nunes says he's leaving Congress by the end of the year". CNN.
24. "Current Vacancies of the 117th Congress". Clerk, United States House of Representatives. Retrieved 3 January 2022. Resigned January 01, 2022 / Rep. Devin Nunes
25. Harwell, Drew (2 September 2023). "Trump's Truth Social facing a key funding deadline". The Washington Post.
26. Harwell, Drew (5 September 2023). "Truth Social investment partner extends deadline, avoiding liquidation". The Washington Post.
27. Picciotto, Rebecca (22 March 2023). "Trump-linked Digital World Acquisition Corp fires CEO Patrick Orlando". CNBC. Retrieved 5 April 2023.
28. Picchi, Aimee (13 October 2023). "Trump Media's funding partner says it's returning $1 billion to investors, with many asking for money back". CBS News.
29. Weprin, Alex (13 November 2023). "Trump's Truth Social Lost Tens of Millions Since Launch, New Filing Shows". The Hollywood Reporter.
30. "Trump's Truth Social Parent Company Sues 20 Media Outlets". Yahoo Finance. 21 November 2023. Retrieved 21 November 2023.
31. "Two key tech execs quit Trump's Truth Social after troubled app launch". Reuters. 4 April 2022. Retrieved 4 April 2022 – via CNBC.
32. Egan, Matt (25 April 2022). "Trump SPAC is down 44% since Elon Musk disclosed Twitter stake". CNN. Retrieved 26 April 2022.
33. Scannell, Kara; Egan, Matt (29 June 2023). "Prosecutors charge three investors with insider trading in Trump SPAC deal". CNN Business. Retrieved 29 June 2023.
34. Goldstein, Matthew; Hirsch, Lauren; Enrich, David (29 October 2021). "Trump's $300 Million SPAC Deal May Have Skirted Securities Laws". The New York Times.
35. Sen, Anirban; DiNapoli, Jessica (22 October 2021). "Trump deal delivers $420 mln windfall for dealmaker". Reuters. Retrieved 7 February 2023.
36. Mangan, Dan (6 December 2021). "Trump SPAC under investigation by federal regulators, including SEC". CNBC.
37. Egan, Matt (6 December 2021). "Federal regulators are investigating the Trump SPAC deal". CNN.
38. Morris, Chris (14 June 2022). "SEC expands investigation into Donald Trump's Truth Social". Fortune.
39. Primack, Dan (27 June 2022). "Subpoenas issued to directors of SPAC taking Trump's social network public". Axios.
40. Kilander, Gustaf (4 July 2023). "Truth Social SPAC reaches SEC settlement as Trump indictment comments reemerge – live". The Independent. Retrieved 4 July 2023.
41. Delouya, Samantha (21 July 2023). "SPAC seeking to merge with Trump's Truth Social media company settles with the SEC". CNN Business. Retrieved 21 July 2023.
42. Chris Andersen (7 July 2022). "Exclusive: Trump left Sarasota media company weeks before federal subpoenas were issued". Sarasota Herald-Tribune.
43. Whitten, Sarah. "Donald Trump left the board of his social media company weeks before federal subpoenas, filing shows". CNBC.
44. Dan Primack; Sara Fischer (7 July 2022). "Trump's social media company disputes he left its board". Axios.
45. Lowell, Hugo (15 March 2023). "Federal investigators examined Trump Media for possible money laundering, sources say". The Guardian. ISSN 0261-3077. Retrieved 15 March 2023.
46. Durkee, Alison. "Trump's Media Company Reportedly Under Federal Investigation For Money Laundering Linked To Russia". Forbes. Retrieved 15 March 2023.
47. Harwell, Drew; Bernardini, Matt; Rosca, Matei (13 May 2023). "Trust linked to porn-friendly bank could gain a stake in Trump's Truth Social". The Washington Post.
48. Franck, Thomas; Li, Yun (27 October 2021). "Rep. Marjorie Taylor Greene bought shares of Trump SPAC Digital World Acquisition as stock skyrocketed". CNBC. Retrieved 3 December 2021.
49. Egan, Matt (27 October 2021). "Marjorie Taylor Greene invested as much as $50,000 in the Trump SPAC before its stock plunged". CNN. Retrieved 3 December 2021.
50. Pietsch, Bryan. "Marjorie Taylor Greene buys up to $50,000 worth of Trump SPAC stock during week of wild fluctuation". The Washington Post. Retrieved 3 December 2021.

External links

• Official website  
• Digital World Acquisition Corp. website