An estimated $4 billion business merger involving former President Donald Trump’s social media company could face a significant obstacle following a lawsuit filed on Wednesday accusing Trump of attempting to dilute the co-founders’ shares.
Andy Litinsky and Wes Moss, the co-founders of Trump’s Truth Social platform, filed a lawsuit in Delaware alleging that their previously negotiated 8.6% stake in Trump Media & Technology Group (TMTG) has been reduced to less than 1%, as reported by The Washington Post and CNBC.
The disagreement arises as TMTG pursues a merger with the publicly traded shell company Digital World Acquisition Corp. The sale, which Digital World’s shareholders are set to vote on next month, is estimated to be valued at up to $4 billion, according to The New York Times.
“The attempt here is to deprive them of the deal,” stated attorney Christopher J. Clark, representing Litinsky and Moss’ partnership, United Atlantic Ventures (UAV), in the complaint, speaking to CNBC News. “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.”
Clark and representatives of Trump, Digital World, and TMTG did not immediately respond to HuffPost’s request for comment on Thursday.
Under UAV’s previously agreed-upon terms, Trump would receive 78 million shares valued at about $3.5 billion based on current share prices. UAV would receive over 7 million shares, totaling approximately $339 million, according to The Washington Post’s analysis of a court motion seeking expedited proceedings in the case.
Digital World seemingly acknowledged the prior agreement with UAV in a Securities and Exchange Commission filing earlier this month. However, the company stated that the agreement had been declared void by a Trump attorney more than two years ago.
The potential sale of any stock could serve as a significant financial lifeline for Trump, who has faced numerous legal judgments since leaving the Oval Office, including a recent order to pay $355 million, plus interest, for business fraud in New York state. On Wednesday, an appeals court judge denied Trump’s request to halt enforcement of that judgment. Trump, currently the leading contender for the Republican presidential nomination, claimed that he lacks the funds to cover the penalty.
This isn’t the first instance where a founder of Trump’s Truth Social platform has voiced criticism against him while alleging misconduct, particularly concerning stocks.
Will Wilkerson, a co-founder of TMTG who was subsequently dismissed after speaking out about alleged securities law violations, claimed in 2022 that Trump urged Litinsky to transfer his stock in the company to his wife, Melania Trump. Wilkerson also alleged that Trump’s sons, Donald Trump Jr. and Eric Trump, sought a financial stake in the social media platform despite never having been employed by the company.
“They were coming in and asking for a handout,” Wilkerson told The Washington Post. “They had no bearing in this company … and they were taking equity away from hard-working individuals.”