Shares of Digital World Acquisition Corp. (DWAC), the shell company associated with former President Donald Trump’s social media platform, experienced a remarkable surge of over 50% on Friday. This boost came after DWAC made an announcement that it had reached a settlement to resolve fraud charges with the Securities and Exchange Commission (SEC), agreeing to pay a substantial $18 million penalty.
Despite this surge, DWAC’s stock value still stands significantly lower at $20.08 compared to its previous highs, which were above $95 in March of the preceding year. DWAC operates as a special purpose acquisition company (SPAC) and had revealed plans to merge with Truth Social’s parent company, Trump Media & Technology Group, in October 2021. However, the merger encountered numerous delays along the way.
The terms of the SEC settlement stipulate that DWAC must pay the $18 million civil penalty if the merger with Trump Media & Technology Group is successfully completed and the company goes public. Nevertheless, there is a condition that if the merger fails to materialize before the deadline of January 1, 2025, and if DWAC refunds investors’ money, the SEC will waive the penalty.
The SEC had alleged that improper discussions regarding the merger had taken place, highlighting the illegal nature of soliciting specific merger targets before an official initial public offering filing, a practice not permitted for SPACs.
This settlement follows closely after the U.S. government brought charges against three individuals from Florida for insider trading related to DWAC.
The company’s stock has been notably influenced by news connected to the former president, such as surges triggered by Trump’s announcement of a 2024 presidential bid and his indictment.
However, this DWAC settlement is just one of the many legal challenges that have emerged for Donald Trump and his businesses since he departed from the White House in 2021. He currently faces state charges in New York over allegations of falsifying business records, as well as federal charges for allegedly mishandling classified documents, to which he has pleaded not guilty.
Adding to his legal troubles, authorities in Georgia are conducting investigations concerning Trump’s attempts to overturn his loss in the 2020 presidential election, while he remains a leading contender for the 2024 Republican nomination.
As of now, neither DWAC nor Trump’s team has responded to requests for comment on the recent developments and legal matters. As the situation continues to unfold, market participants and political observers are closely watching for further developments and potential implications on DWAC’s future and Donald Trump’s legal standing.