A special purpose acquisition company (SPAC) that had planned to merge with the media firm behind former US President Donald Trump’s Truth Social app may find itself off the tech-centric Nasdaq index.

The Digital World Acquisition Corporation released a statement on Wednesday, May24th, wherein it disclosed that it received a delisting notice from Nasdaq after it failed to file a quarterly report for Q1-2023.

The company statement added that Nasdaq’s notification will have no immediate effect on its listing or the trading of its securities on the index.Digital World was given till July 24, 2023 to submit a plan that shows it will comply with the index’s rules, but this offers no assurance that Nasdaq will accept their plan. 

Likewise, it is unclear if Digital World will be able to regain its compliance within the stipulated extension period.

What’s the Story Here?

In October 2021, Digital World announced that it was planning to buy the Trump Media & Technology Group (TMTG) which owns the controversial social media platform Truth Social.

However, due to delays in a shareholder vote on the acquisition, it never came to pass and was finally called off in September last year.

Legal issues have also plagued the proposed merger as it is currently under investigation by the Justice Department as well as the Securities and Exchange Commission (SEC.)

Back in June, the company also received a number of subpoenas from a federal grand jury from New York’s Southern District with regard to due diligence done beforehand.

Since then, Digital World claimed that federal investigation has been the biggest blog to finalizing its deal with TMTG – but this has not kept the company from pushing for the deal. While its shareholders have voiced their rejection of the TMTG deal, the company sought to pursue the deal as its chief sponsor, ARC Global Investments II, already deposited $3 million into its trust account to exercise its option to extend the merger.

The ARC investment helped anchor the initiative, as Digital World would have been forced to return the $300 million it previously raised to push the merger through. A liquidation would have also posed a threat to the $1 billion TMTG raised for the initiative.