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Trump files a lawsuit against co-founders of Truth Social Media, shares pop

Published 04/02/2024, 04:30 PM
Updated 04/02/2024, 04:32 PM
© Reuters.  Trump files a lawsuit against co-founders of Truth Social Media, shares pop

Donald Trump has initiated legal action against the co-founders of Trump Media & Technology Group (DJT), Andy Litinsky and Wes Moss, over a dispute concerning ownership shares.

The lawsuit, lodged on March 24 in a Florida state court, asserts that Litinsky and Moss are not entitled to their 8.6% stake in the company, citing violations of the foundational agreement of the social media firm.

This legal action comes after Litinsky and Moss filed their own lawsuit against Trump in the Delaware Chancery Court, where they claim their promised shares in the company are being compromised.

Trump Media, which recently became a publicly traded entity through a merger with a special purpose acquisition company (SPAC), witnessed a volatile session on Tuesday. Following a disclosure of a $58 million loss for 2023 and warnings of financial instability without the SPAC deal's funds, the company's stock fell by 21%. However, it later recovered, closing 6% higher.

In his lawsuit, Trump accuses the co-founders of failing to establish the company's corporate governance properly, inadequately launching the Truth Social platform, and not securing a suitable merger partner.

These missteps, according to Trump, have damaged the company. Meanwhile, Litinsky and Moss argue that Trump aimed to acquire additional shares, diluting their stake.

Trump's ownership in Trump Media has significantly increased his net worth, presenting a potential avenue to settle legal debts. However, due to a lockup period, he is currently unable to sell his shares for six months.

During a recent court hearing, the Delaware Judge, Sam Glasscock III, decided not to expedite the lawsuit by Litinsky and Moss after Trump's legal team assured that the co-founders' share value would not be diminished. Nonetheless, the co-founders have expressed intentions to request an order to halt Trump's Florida lawsuit while their claims are still under consideration.

Judge Glasscock said he was “gobsmacked” when he learned of Trump’s Florida lawsuit, considering potential sanctions against the former US president for not filing counterclaims in Delaware.

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