In October 2021, Trump launched Trump Media & Technology Group (TMTG) and TruthSocial, along with an ambitious plan to build a media empire that he claimed would compete with the likes of Twitter, Facebook, and Netflix. To do this, he would need to raise some serious cash. Enter Digital World Acquisition Corp., a special purpose acquisition company (SPAC), a shell company to raise money and identify a merger target to take it public.

Fast forward to October 2023. Digital World is collapsing, and it’s taking Abu Dhabi-based ARC Global Capital LLC and other investors down with it. After Digital World initially raised $1 billion in private investments to merge with TMTG, it is now returning $533 million back to investors.

Shares of Digital World dropped to $15.54 on the news from a peak of $97 in March 2022. Digital World’s 2022 Annual Report, published April 26, 2023, reveals that ARC Global Capital owned 3.8% of Digital’s Class A common stock and 76.4% of Class B common stock, amounting to 14.8% of the SPAC’s total shares outstanding.

According to ARC Global’s website, “Since its inception, ARC Global Investment Capital LLC has invested in transactions totaling in excess of $2bn in combined enterprise value achieving top quartile returns and no losses to date.” That’s probably gonna need an edit pretty soon.

Digital World still owes its independent accounting firm, Marcum LLP, $361,660 in fees incurred during 2021 and 2022.

Perhaps that’s why Marcum stated in its audit of Digital World’s finances that “the company cash and working capital as of December 31, 2022 are not sufficient to complete its planned activities for a reasonable period of time.” As of December 31, 2022, Digital World has accumulated a total stockholders’ deficit of almost $31 million.

Digital World originally set a deadline of September 2022 to merge with TMTG. However, the US Securities and Exchange Commission threw a wrench in those plans. Turns out, when you form a SPAC, you’re not supposed to have a predetermined acquisition target; the SPAC is supposed to seek potential acquisition targets rather than identify a target beforehand, as Digital World did. This, and many other legal missteps doomed the SPAC to multiple regulatory investigations.

The SEC settled its case in July 2023, ruling that Digital World violated the antifraud provisions of federal securities laws, and assessed an $18 million penalty.

Curiously, just before TMTG received subpoenas from the SEC and a New York grand jury, Trump resigned as board chairman, and Donald Trump Jr., and former Trump administration official Kash Patel resigned from TMTG’s board. Trump still owns 90% of TMTG.

In 2022, the Southern District of New York investigated TMTG for money laundering, after finding it received a $8 million in loans: $2 million from Paxum Bank, based in Dominica and chartered under the Offshore Banking Act No. 8 of 1996. Paxum is partially owned by a former Russian government official who now runs a maritime agency under the jurisdiction of the Ministry of Transport of the Russian Federation. The other $6 million came from “ES Family Trust” which shared a director with Paxum.

Investors are now backing away, leaving Digital World with only $293 million – an amount that would be transferred to TMTG if the deal ever closes. That amount could dwindle as the potential for investors to request further redemptions remains.

Losers include not only Trump, who won’t be realizing his dream to build a media juggernaut, but also early investors, such as Georgia congressional representative Marjorie Taylor Greene, who invested between $15,001 and $50,000 in Digital World at $94.20 in 2022. Her losses based on current stock valuation of $15.54 amount to -84%. Hope it was worth it, Marge.

Count Devin Nunes among the losers as well. Devin Nunes (remember him?) vacated his congressional seat in favor of clinging to Trump’s disintegrating coattails as TMTG CEO. Nunes, despite representing California for nearly 20 years in Congress, is best known for losing his defamation lawsuit against a satirical Twitter account named Devin Nunes’ Cow. He can now add failed social media company CEO to his resume.

TruthSocial, Trump’s “Twitter alternative” social media platform has managed to garner only about 2 million monthly active users. For comparison, X (formerly known as Twitter) has about 245 million daily active users. Facebook has about 3 billion monthly active users. Even Mastodon and its larger group of interoperable servers known as “The Fediverse,” which is owned by no single individual or company, has 10.7 million registered users of which 1.5 million are daily active users.

So, it is safe to say that Truth Social and its parent TMTG can join a long list of Trump’s other business failures.

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