Would-be Truth Social buyer faces probe by grand jury

The company planning to buy Donald Trump’s new social media business has disclosed a federal grand jury investigation that it says could impede or even prevent its acquisition of the Truth Social app.

Shares of Digital World Acquisition Corp. dropped 10% in morning trading Monday as the company revealed that it has received subpoenas from a grand jury in New York.

The Justice Department subpoenas follow an ongoing probe by the Securities and Exchange Commission into whether Digital World broke rules by having substantial talks about buying Trump’s company last year before Digital World sold stock to the public for the first time in September.

Trump’s social media venture launched in February as he seeks a new digital stage to rally his supporters and fight Big Tech limits on speech, a year after he was banned from Twitter, Facebook and YouTube.

The Trump Media & Technology Group — which operates the Truth Social app and was in the process of being acquired by Digital World — said in a statement that it will cooperate with the SEC.

The new probe could make it more difficult for Trump to finance his social media company. The company last year got promises from dozens of investors to pump $1 billion into the company, but it can’t get the cash until the Digital World acquisition is completed.

Stock in Digital World rocketed to more than $100 after its deal to buy Trump’s company was announced was going for $25 early Monday.

Digital World is a special-purpose acquisition company, or SPAC, part of an investing phenomenon that exploded in popularity over the past two years. Such “blank-check” companies are empty corporate entities offering investors the promise they will buy a business in the future. As such they are allowed to sell stock to the public quickly but only if they haven’t already lined up possible acquisition targets.