Top financial auditors of the US stock market are investigating the $1 billion 250 million deal made by former President Donald Trump for his new social media venture.
Digital World Acquisition company, which has agreed to merge with Trump Media & Technology Group (TMTG), announced that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are reviewing the agreement.
Digital World company stated that the SEC requested that the correspondence between the two companies, meetings with the Digital World board of directors, trade-related policies and regulations, banking, telephone and e-mail addresses be disclosed at the beginning of November, and the identities of some investors were disclosed.
Senator Elizabeth Warren has also asked the SEC to investigate TMTG’s proposal to merge with Digital World for potential violations of certain securities laws.
The investigations came as Trump supporters and retail investors were excited about the planned deal. The rapid trading of Digital World shares brought TMTG’s $875 million valuation in October closer to $4 billion.
Digital World, whose shares fell 1.8 percent after the news of the investigation, stated that FINRA requested details about the merger in late October and early November.
Digital World underlined that both FINRA’s and SEC’s requests stated that an investigation did not mean that there was a violation of Nasdaq rules or securities laws.
TMGT, SEC and FINRA declined Reuters news agency’s requests for comment on the matter.
TMGT said on Saturday that it had agreed with a group of unidentified investors to raise approximately $1 billion, bringing the total revenue of the deal to $1.25 billion.
TMTG will only receive this money if the deal is completed. The approval of Digital World shareholders is required for the transaction to be approved.
It is not known from which investors the $1 billion donation came from.
Trump was banned from mainstream social media platforms on January 6, after his supporters cracked down on Congress, lest he incite further violence.
The unfounded news of election corruption spreading on social media is thought to have been influential in the process leading up to the Congressional raid.
In its first financial projections since the announcement of the merger with Trump’s company, Digital World said it expects the average revenue per user for Trump’s social media app TRUTH Social to grow to $13.50 per user by 2026, with 81 million total users.
The application is not even in the testing phase yet. TMTG plans to release the beta version of Truth Social in the first quarter of 2022.
Digital World noted that it expects TMTG to reach 40 million subscribers by 2026. Twitter has 200 million daily active users.