Two investors in former President Donald Trump’s social media company, Truth Social, have pleaded guilty to insider trading charges related to the recent merger that took the company public. Florida venture capitalists Michael Shvartsman and Gerald Shvartsman admitted in court that they received confidential information about the merger between Digital World Acquisition Company (DWAC) and Trump Media and used that information to make profitable but illegal trades on the open market. The brothers allegedly made over $22 million in illegal profits. Insider trading is considered cheating, and these convictions serve as a reminder that it will result in prison time.
The Shvartsmans are scheduled to be sentenced on July 17, and while securities fraud carries a maximum sentence of 20 years, the actual sentence will be determined by the judge based on various factors. On average, federal fraud cases in the United States receive a prison sentence of around two years. It is important to note that there are no allegations that President Trump was involved in the scheme.
Meanwhile, Truth Social’s parent company, Trump Media, has faced its own challenges. After being publicly listed in late March under the stock ticker “DJT,” its shares experienced significant volatility driven by enthusiasm for President Trump. However, the stock has recently seen a decline after it was disclosed that the company lost over $58 million in 2023. As of Wednesday morning, shares were trading at around $51.60. Despite this, Trump’s stake in the company is still valued at approximately $4 billion.
Trump Media is also embroiled in legal battles with co-founders Wesley Moss and Andrew Litinsky, who have accused the company of attempting to dilute their stake improperly. The company argues that Moss and Litinsky failed to earn their shares and seeks to strip them of their ownership. In a statement released by Trump Media, CEO Devin Nunes expressed optimism about the future and highlighted the company’s financial stability with over $200 million in the bank. He emphasized their commitment to making Truth Social a platform for free speech.
Overall, the guilty pleas of the Shvartsmans shed light on the illegal practices that occurred surrounding the merger between DWAC and Trump Media. While President Trump is not implicated in the scheme, the legal battles and financial challenges faced by Trump Media raise questions about the company’s future. As the case unfolds, it remains to be seen how these developments will impact Truth Social and its mission to provide a platform for free speech.
