Trump probably diluted Truth Social's shares, co-founders sue the platform - Hindustan Times
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Donald Trump probably diluted Truth Social's shares, co-founders sue the platform

Mar 01, 2024 12:04 PM IST

Legal storm hits Donald Trump's Truth Social as co-founders sue, alleging a drastic cut in their stake, threatening a $4 billion merger.

A lawsuit filed on Wednesday could derail a $4 billion business deal involving former President Donald Trump’s social media venture. The lawsuit accuses Trump of reducing the co-founders’ shares in the company.

Former U.S. President Donald Trump walks outside the courtroom on the day of a court hearing on charges of falsifying business records to cover up a hush money payment to a porn star before the 2016 election, in New York State Supreme Court in the Manhattan borough of New York City, U.S., REUTERS/Andrew Kelly/File Photo(REUTERS)
Former U.S. President Donald Trump walks outside the courtroom on the day of a court hearing on charges of falsifying business records to cover up a hush money payment to a porn star before the 2016 election, in New York State Supreme Court in the Manhattan borough of New York City, U.S., REUTERS/Andrew Kelly/File Photo(REUTERS)

The co-founders of Trump’s Truth Social platform, Andy Litinsky and Wes Moss, sued Trump in Delaware, alleging that their original 8.6% stake in Trump Media & Technology Group (TMTG) has been slashed to less than 1%, according to The Washington Post and CNBC.

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The legal battle comes as TMTG plans to merge with Digital World Acquisition Corp, a publicly traded blank-check company. The merger, which is subject to the approval of Digital World’s shareholders next month, could value TMTG at up to $4 billion, The New York Times reported.

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“The attempt here is to deprive them of the deal,” said Christopher J. Clark, the lawyer for Litinsky and Moss’ firm, United Atlantic Ventures (UAV), in the lawsuit.

“They actually went out and did the work, they created Truth Social, and now the beneficiary of that, Donald Trump, doesn’t want to pay.”

Trump’s deal with UAV in jeopardy

According to The Washington Post, a court document seeking a speedy trial in the case showed that under the initial agreement, Trump would get 78 million shares worth about $3.5 billion at the current market price. UAV would get more than 7 million shares worth around $339 million.

However, Digital World said in a filing with the Securities and Exchange Commission earlier this month that a Trump lawyer had nullified the agreement with UAV over two years ago.

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The stock sale could be a huge financial boost for Trump, who has faced several legal setbacks since he left the White House, including a $355 million verdict, plus interest, for committing business fraud in New York.

On Wednesday, an appeals court judge rejected Trump’s request to halt the enforcement of the verdict. Trump, who is leading the race for the Republican presidential nomination, claimed that he did not have enough money to pay the fine.

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