Donald Trump has initiated legal action against two co-founders of Trump Media & Technology Group Corp., alleging they mishandled the company’s formation and are undeserving of their stake.
In the lawsuit, filed in Florida state court on March 24, Trump contends that Andy Litinsky and Wes Moss breached an agreement regarding the company’s setup and should forfeit their 8.6% stake, valued at $606 million.
This legal dispute arises amidst volatile fluctuations in Trump Media’s stock, which commenced trading last week following its merger with a special purpose acquisition company (SPAC).
The stock plummeted by 21% on Monday after Trump Media’s disclosure of a $58 million loss and minimal revenue for 2023, accompanied by a reiteration of its dependence on funds from the SPAC deal for operational sustenance. Despite this downturn, the stock exhibited a 6.1% increase, reaching $51.63 on Tuesday afternoon, Bloomberg who first reported the news said.
The crux of the matter
Trump asserts that Litinsky and Moss failed in their duties to establish Trump Media’s corporate governance structure, launch the Truth Social platform, and identify a suitable merger partner, thereby impeding the company’s progress.
He alleged their subsequent efforts to disrupt the blank check deal further exacerbated the situation. Conversely, Litinsky and Moss contend that Trump had intentions to dilute their stake by seeking additional shares.
Trump’s net worth has increased due to his stake in Trump Media, offering potential relief from substantial legal liabilities. However, a six-month lockup prevents him from selling his shares immediately. With Trump holding a 57% ownership stake, valued at $4.02 billion, according to filings with the US Securities and Exchange Commission, the outcome of this legal battle could significantly impact his financial standing.
What the court Judge thinks
The Delaware judge overseeing Litinsky and Moss’s lawsuit has expressed astonishment at Trump’s filing in Florida instead of pursuing counterclaims in his courtroom.
The judge has indicated a willingness to explore potential sanctions against Trump, emphasizing the complexity of the legal proceedings surrounding Trump Media’s tumultuous trajectory.
The lawsuit, Trump Media & Technology Group v. United Atlantic Ventures, is currently under consideration in the Florida Circuit Court, 12th Judicial Circuit.