Mon. May 23rd, 2022

Donald Trump’s new social media company announced that the blank check company it set up to monetize the former president’s digital and political mojo has raised $ 1 billion ($ 1.4 billion) – without identifying members of the “diverse group” of institutional investors “who support him.

Trump, a disinformation king who has been exiled from mainstream social media platforms, has positioned his great startup, Truth Social, as a means of combating “censorship and political discrimination” and “Big Tech’s tyranny.” It’s also a convenient way for Trump to continue his life’s work: to separate investors and fans from their wallets by making promises that he routinely does not keep.

Former US President Donald Trump's social media platform is being positioned as a means to combat

Former US President Donald Trump’s social media platform is being positioned as a means of combating “censorship and political discrimination” and “Big Tech’s tyranny.”Credit:AP

Admittedly, some investors have already done well in this charade. When the Trump Media and Technology Group announced in October that it would use Digital World Acquisition, a special purpose acquisition company (or SPAC) to be listed, SPAC shares rose from $ 9.96 per share. share at $ 94.20 in two days. . The stock has since fallen to $ 44.97, but hedge funds and others that bought into DWAC early have had a nice return.

On the other hand, the only listed company Trump has managed, his fateful casino gambit, made numerous trips through bankruptcy, burned investors, banks and employees along the way, leaving an eerie collection of craters in Atlantic City. Trump, backed by his father, survived that meltdown, but few others did. Trump Media and Truth Social have already unfolded some red flags. They plan to open their doors early next year, but as my colleague Matt Levine has noted, they do so without a detailed business plan or financial projections. Nor has Trump Media completed its merger with DWAC or made any associated securities. And SPACs have so far had poor track records that have underperformed more standard initial public offerings. (The Securities and Exchange Commission is already taking a look at DWAC, including requesting records linked to the identities of certain investors, the company revealed Monday.)

So, warning emptor.

But there is another and more consequence concern in all this. Trump is a former resident of the Oval Office and is likely to run for another presidential election in 2024. He had his fingers in the national security apparatus once before and may well again. The identity of the investors who have just thrown $ 1 billion after him is of interest because anyone who is able to buy into Trump’s good grace by throwing a bag of money at his desk can influence public policy – making Trump a national security threat.

For example, what could it mean if countries like Saudi Arabia or others in the Middle East have decided to invest in his venture? This is not a completely hypothetical question.

Former Finance Minister Steven Mnuchin recently launched an investment company, Liberty Strategic Capital, with funding from the Saudi government and other countries in the Persian Gulf region. Mnuchin was close to the same countries when he was one of the most powerful US financial regulators in the Trump administration, but avoiding economic conflicts of interest was never a priority for Mnuchin, Trump and many others on that team.

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