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Canada Business

Digital World Extends 7-Day Drop After Truth Social Threatens SEC Lawsuit


  • On Thursday, Digital World Acquisition fell 5%, extending the seven-day decline to more than 30%.
  • Truth Social, the target of the SPAC merger, threatened to sue the SEC, alleging that political bias delayed the proposed merger with Digital World.
  • But Digital World failed to attract the 65% shareholders needed to approve the business combination.

On Thursday, Digital World Acquisition’s share price fell another 5%, extending the seven-day drop to 32% as the company struggles to close a proposed merger with Truth Social.

Since Digital World first announced its deal with Truth Social last year, SPAC has fallen 90% from its all-time high of $175 a share. The latest decline was exacerbated by Digital World’s inability to complete its merger with Truth Social before the deadline.

But Truth Social believes the SEC is to blame for the delay in the SPAC deal, according to a regulator filing Wednesday.

“The SEC has suspended consideration of our planned merger with DWAC without taking any action, despite the fact that DWAC filed for registration more than four months ago. This is an unforgivable obstacle that directly contradicts the stated mission of the SEC, hurting investors and many others who are simply following the rules and trying to expand successful businesses,” Truth Social said in a statement.

“In light of apparent conflicts of interest among SEC officials and clear indications of political bias, TMTG is currently investigating legal action against the SEC. an unprecedented level of user interaction with the platform,” the company added.

One of the factors holding back the deal, not mentioned in Truth Social’s statement, is the fact that Digital World was unable to raise the 65% shareholders needed to approve the business combination. The initial shareholder vote did not take place earlier this month, and the vote has since been delayed until mid-October in an attempt to gather more votes.

With continued uncertainty that Digital World could secure the required number of votes by mid-October, the SPAC sponsor has contributed about $3 million to extend the potential deal’s deadline to December 8th.

But if a deal cannot be struck, as many SPACs are today, Digital World may be forced to liquidate and return the money received from investors.



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