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ftx-exchange-sam bankman-fried

FTX Crypto Exchange Debacle Simply Explained

Sam Bankman-Fried (aka “SBF”) Fries Clients and Customers

FTX Crypto Exchange Bankruptcy Explained; Investors Loss Estimated at $2bil; Exchange Customers Loss Estimated at $4bil-$5bil (so far..)

Comparisons Made to Lehman Brothers Scandal; Sam Bankman-Fried Scheme More Similar to Jon Corzine Shenanigans when he ran MF Global into the ground.

FTX & Alameda Research Found Sam Bankman-Fried with Carlyle Group Co-Founder and Billionaire David Rubenstein

By now, the travails and debacle of FTX Cryptocurrency Exchange, established by MIT wunderkind and former Jane Street Capital trader Sam Bankman-Fried aka “SBF”, has sucked up more oxygen in the media landscape than 1000x the electricity needed to mine $5trillion worth of crypto / craptocurrency*.  

(* Editors note: MarketsMuse hereby petitions the financial industry, the media, and all others to now refer to “Crypto Industry” as “Crapto Industry”; and we have secured trademarks for the new phrase, as well as the trademark for “CraptoCoins”).

As of this writing, Google has counted more than 120 million search inquiries for the search term Sam Bankman-Fried and 6,500,000 search inquiries for “FTX”; the former far eclipsing the 30 million searches for “FM Global Crisis” and the 11 million queries for “Lehman Crisis”, the story that profiled Lehman Brothers collapse, the poster-child for the 2007-2008 global financial crisis. At this pace, “FTX” queries will dwarf the 220 million searches on Google re: “Global Financial Crisis 2008”.


But, as pictured below, this ain’t the first and it won’t be the last financial scandal. Not by a long shot. When considering this generation’s more recent protagonists, why would anyone be shocked??

According to the assortment of news reports, a cohort of 80+ institutional investors who manage respective pension fund and HNW client assets, along with a handful of individual celebrity investors (e.g. Meta’s Mark Zuckerberg, Millenium Management’s billionaire founder and chairman, Israel Englander, hedge fund legend Paul Tudor Jones, Shark Tank star, Kevin “Mr. Wonderful” O’Reilly, and football legend/investor Tom Brady), had deployed more than $2bil to either FTX entities, and/or SBF’s proprietary trading firm, Alameda Research, both enterprises entirely controlled by SBF.

Former Jane Street trader and FTX Founder Sam Bankman-Fried aka “SBF”

“FTX is the high-quality, global crypto exchange the world needs, and it has the potential to become the leading financial exchange for all types of assets. Sam is the perfect founder to build this business, and the team’s execution is extraordinary. We are honored to be their partners.” — Alfred Lin, partner at Sequoia Capital

So, MarketsMuse editors have attempted to consolidate the coverage and unpack the events that inspired the venture capital’s ‘smartest investors’ (including Altimeter Capital to BlackRock, Greylock, Insight Partners, Lightspeed Ventures, Ontario Teachers Pension Plan, Pantera Capital, Sequoia Capital, Softbank, Temasek Holdings, Dan Loeb’s Third Point Ventures, and Thoma Bravo to disregard any standard or semblance of due diligence before they parted with their client’s money.

“We have watched with excitement as Sam and the FTX team have successfully built the most cutting-edge, sophisticated cryptocurrency exchange in the world. While this has been an incredible accomplishment in itself, their commitment to making a positive impact on the world through their business is what sets the company apart. We are thrilled to partner with FTX on their next phase of growth as they create a new ecosystem for crypto.” — Orlando Bravo, founder and managing partner at Thoma Bravo

In the simplest terms, all of these investors deployed their clients’ money because they all determined (or were told) that SBF was a genius trader who earned $100mil for himself while working for HFT firm Jane Street, and then left to set up his own firm, where he made himself into a billionaire by buying and selling crapto currencies. Believing he could build a better mousetrap for people to trade crapto, he took some of his profits to build a “world-class crapto currency exchange.” That exchange, FTX, quickly attracted as many as one million retail customers, all of whom were convinced they could make fortunes via “yield farming” (a bizarre means by which investors attempt to earn Madoff-level interest on their money via purchasing and then lending out ‘coins’ to others), or buying and selling a broad assortment of ‘currencies’ that dominate the Crapto Industry. 

Keep in mind, that the many “industry experts”, outspoken advocates, and the several dozens of ‘asset managers’ overseeing billions of dollars of investors’ money, who “specialize in digital assets”, all these people buy and sell what most industry insiders acknowledge to be nothing more than air bubbles.

A Leading Crypto Trader

According to one such insider (who has held corporate communications roles for several firms in the crapto industry, and who asked to remain nameless, for obvious reasons), “80% of the firms in this business laugh behind the backs of their investors every day; they are getting outsized compensation to simply speculate in tens of dozens of different valueless ‘tokens’ that they [the asset managers] know to be no more akin to being currencies than farts are.”

Added the insider, “just like traditional hedge funds, they get paid hefty management fees, and a fat percentage of the ‘profits’, but unlike traditional hedge funds that invest across a spectrum of legitimate assets and legitimate, industry-regulated derivatives, they are buying and selling the farts in a completely unregulated environment, and when they lose, its no skin off their back. In the interim, they promote themselves (using their clients’ money) at lavish industry conferences and boondoggles, they host six-figure corporate offsites, they sponsor sports teams, all to the expense of investors who are told they can beat the returns of the best legitimate hedge funds in the world.”

Sam Bankman-Fried, aka “SBF”

What happened at FTX? It is pretty simple to understand for those who understand the regulated market structure.

The best analogy is that of commodity trading advisor MF Global, which was torched in 2011 by its CEO and former Goldman Sachs CEO Jon Corzine. The one-time US Senator and one-time New Jersey Governor stepped in to run one of the commodity trading industry’s oldest and largest brokerage firms (previously known as Man Financial), and soon thereafter, he was accused of using customers’ money to backstop highly-leveraged proprietary trades the firm made in emerging market debt and exotic fixed income products. When the leveraged trades went sour, the firm dipped into customer account balances (to the tune of $1bil) to meet margin calls from an assortment of counter-parties, and when rumors heightened as to the precarious nature of the firm’s proprietary trading activities, customers flocked en masse to get their funds out of the firm. But the funds were not in their accounts, as they had been pledged as collateral by the financial alchemists at MF Global.

Jon Corzine, MF Global Alchemist

To a great extent, the same thing happened to FTX and SBF. His proprietary trading firm, Alameda Research, was making outsized bets in crapto currencies, including buying his own firm’s private label crapto, “FTT”, which he used as ‘currency’ to purchase control of an assortment of competing firms, including a list of failing firms in the industry that went belly-up in the midst of this year’s ‘crypto winter’.

The best part? NO internal risk management, no internal compliance, no industry regulators to wander in and interrogate any risk management systems, no adults in the room, and no industry clearing organizations that have any rules or procedures to govern the extent of leverage trading firms can use.

This is exactly what the industry, including the biggest player and notorious money-laundering platform Binance has been working towards since Day `1. “We don’t believe in following the regulations of other people, we are independent, we know better!”

Worth mentioning, despite MF Global operating in a completely regulated industry (regulated by CFTC), Corzine, started as a bond trader before becoming CEO at Goldman Sachs. Per above, before MF Global, he was Governor of New Jersey and also U.S. Senator for New Jersey; despite the shenanigans that took place at MF Global, he was never criminally prosecuted. He did pay a $5mil fine and was banned from serving in a leadership role for any CFTC-regulated firm.

One interesting factoid, current SEC Commissioner Gary Gensler was the CFTC Commissioner who approved the final outcome for Corzine.

ftx-exchange-sam bankman-fried

So, what are the key takeaways?

  • A bunch of smart-ass institutional managers who were so enamored with the media reports about wunderkind day trader and trading exchange innovator, SBF, failed in just about every way to perform their fiduciary duties of the FTX exchange, or to question what the relationship was between FTX and SBF’s proprietary trading firm, Alameda Research. Thanks to this gross oversight, these genius investors managed to collectively lose $2bil of their investors’ money. Again, it’s not coming out of those managers’ personal pockets, as they continue to earn 2% fees for ‘managing’ their client’s assets. As a representative for Sequoia stated this past week when informing that firm’s investors they would be writing down $214mil, “We are in the business of taking risk; some investments will surprise to the upside, and some will surprise to the downside.”   Mea Culpa?
  • The Crapto Industry is as completely unregulated as it is completely ‘decentralized’. There is no regulation, and few in the industry want there to be any regulatory oversight, other than perhaps US-domiciled Coinbase and US-domiciled Kraken, another exchange operator.

Case in point, Binance, the world’s largest ‘crypto exchange’ which is operated by freshly-minted billionaire Changpeng Zhao, (another guy who likes to be called by his acronym,“CZ”…What is with these guys? They all emulate Saudi Princes?!) has no credible corporate domicile unless you want to believe that companies registered in the Cayman Islands offer safeguards for investors. The only place on the planet where it is registered with a regulatory agency is France. That’s right, there is no regulatory agency anywhere other than in France that can credibly pursue Binance in the event they are subjected to accusations of bad behavior. Beaucoup de chance!

  • Crapto Currencies are just like farts. The only intrinsic ‘value’ is the hope that some idiot will pay more than you just did. That’s only presuming that someone else likes the smell of your fart and would like to buy it from you and bottle it for safekeeping. Your digital wallets might as well be in the Metaverse, and we know how that’s working out for Zuck.   
  • JP Morgan CEO Jamie Dimon has been right all along about the nefarious nature of crypto and bitcoin. Yes, he has since allowed JP Morgan to let customers buy and sell this stuff despite his trepidations. He simply gave in to the underlings who said “the customer is always right and if they want a financial product, it’s our obligation to offer it to them!” Fidelity did the same, they opened the gates to their brokerage firm customers to trade crypto this year.
Has Jamie Hit the Bullseye?
  • Mike Novogratz, another Goldman Sachs aka Squid University alumni, and also a former bond trader, almost blew up Fortress Investment Group all by himself, yet the firm was sold and he turned a $10mil payout into becoming a crapto pioneer and he accumulated a nearly $2b nest egg (down from $8.5b) inside of four years. That aside, most within the industry view him as a renegade, if not a complete knucklehead. His financial services firm, Galaxy Digital, is publicly traded on the Toronto Stock Exchange (GLXY.CN) and “Novo” is a poster boy for the bitcoin and crapto currency industry. He also managed to get clipped for $80mil in the FTX meltdown. According to those who know him well, he is said to be “certifiable”.
Mike Novogratz, Genius
The Mooch, “I guess I was duped..”
  • Anthony Scaramucci, another graduate of Squid University, and a former Trump Whitehouse spokesperson (for all of 9 days), is yet another celebrity poster child for the crapto industry. He runs a “fund of funds” called “Skybridge”, which is dedicated to taking investor money and buying crapto currrency. During the 2022 crapto meltdown, he managed to squander away hundreds of millions of dollars given to him by investors. Our favorite quote from him (so far) is, “In the future, DOGE may become a competitive store of value. If Bitcoin is digital gold, then DOGE has a chance to become digital silver,” 

When acknowledging that his investment fund, Skybridge, was one of the many who invested in FTX, he said, “Gee, I guess I was duped.” Mea Culpa?

  • Instead of “Crypto Industry”, the active phrase is now Crapto Industry, until such time as investors demand regulations that match those inherent to the US financial market system. We admit that will be a stretch; too many legislators are influenced by big-buck lobbyists who will always be able to buy votes on behalf of their billionaire constituents and industry trade groups that make big bucks at the expense of unwitting, uninformed, or ‘easily-duped’ investors of all shapes and sizes.

Frmr CFTC & Current SEC CommishGary Gensler
  • Gary Gensler is so far over his skis when it comes to advancing important and timely initiatives that will protect investors, its almost indescribable. Let’s not forget that Gensler was the CFTC Commissioner who oversaw the MF Global investigation and the final outcome was a get-out-of-jail-free card for Jon Corzine.
  • Aside from the simple fact that it will take a squadron of lawyers to figure out whether or not the SEC even has jurisdiction over the FTX scandal and SBF, the SEC has long proven itself to be toothless, without qualified resources, and overwhelmed by a tsunami of issues, crimes, and broken policies. Fraudsters and bad actors have little to fear from the SEC, if only because when they do assert laws have been broken, they are obliged to turn over their conclusions to the U.S. Department of Justice, which is equally devoid of prosecutorial talent, and their prosecutors are notorious for limiting their pursuit of criminals to only the biggest headline-grabbing cases.

Case in Point:

seaquake.io crypto scam-andrew katz-matthew krueger-dylan-knight
Seaquake.io Scammers Andrew Katz (l), “CFO” Matthew Krueger (c) and CIO Dylan Knighthttps://www.marketsmuse.com/andrew-katz-seaquake-crypto-firm-still-scamming/

See Seaquake.io Scam website www.seaquake.io

When or if former Disney star Brock Pierce, yet another crapto currency billionaire, re-visits running for President, that’s when we all put our heads between our knees, grab our ankles, and contemplate moving to Kyiv.  

Finally, the explanation we offer regarding the FTX debacle is not intended to decry or debunk the blockchain industry, which is a completely different segment.

As best framed in a series of 2018 articles published at Prospectus.com, Its About Blockchain, blockheads, NOT Bitcoin” , blockchain and distributed ledger applications can offer meaningful utility to a range of enterprise solutions. The only ‘token’ component to these applications is the token (NOT COIN) is used to access applications. Those building enterprise applications rarely incorporate a component that places a value on the token, other than for its purpose of accessing software. Just like a subway token. That’s pretty simple.

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$DWAC, The SPAC on Crack

Digital World Acquisition Corp (NASDAQ:DWAC) Blank Check Company aka SPAC Proposes to Merge With Trump Blank-Deck Company. Will SEC Investigate?

When “E.F. Hutton Talks”, Will SEC Chairman Gensler Read the SEC and FINRA Rules Prohibiting SPAC Sponsors from engaging with acquisition targets prior to listing??

Just when we thought that MarketsMuse coverage of Donald Trump’s financial shenanigans had taken a breather, this past week’s announcement by SPAC sponsor Digital World Acquisition Corp (NASDAQ:DWAC) rocked the stock market and created a rocket-fueled run-up in its share price after the ‘blank check’ company created in December 2020 by Florida-based Patrick Orlando, a former Deutsche Bank derivatives trader turned SPAC promoter would be merging with Florida-based Trump Media & Technology Group (aka TMTG), a blank slate “social media enterprise” with no operating history and established by the former President two months after the formation of “DWAC” (in February 2021).

The Meme of the Week. When the announcement made by the DWAC sponsors and the Trump entity TMTG hit the tapes after the close of trading Wednesday, Oct 20, the following morning, the share price of the Digital World Acquisition Corp, which became publicly listed on NASDAQ six weeks prior, soared from $10 to $75 within a matter of a few hours, and was the second most actively traded stock in America. On Friday, the shares, which cannot be borrowed for shorting other than by broker-dealers, traded as high as $175 before closing at $90 (with the last sale of $80 in Friday’s after-hour trading session).


If the DWAC SPAC shareholders approve of the merger, and if the SEC does not raise a red flag, Trump Media & Technology Group will receive $293 million in cash that Digital World Acquisition Corp has in trust. 

So, we now have the next classic example of a “meme stock” (aka “Me-Me”) driven by so-called Reddit Bandits and tens of thousands of retail traders entering buy orders to drive up the price, believing they would force ‘hedge funds’ who might have been shorting the stock to pay even higher prices to cover their positions.  It’s a new take on the old-style “short-squeeze pump and dump.” 

Read about our coverage of Crypto-Kid Con Artists Andrew Katz and Matthew Krueger. The Saga continues. After being charged with felony assault in New York last year, Seaquake CEO Katz is said to be a “no-show” after failing to appear for Jan 20 2022 sentencing hearing at Manhattan Criminal Court. NOW A Fugitive/CLICK HERE/ for the story.

OK, a slug of buyers who swamped Fidelity, Robinhood, TD Ameritrade, and other brokers are also MAGA cap wearers and anti-vaxxers who will give Trump every last penny of their unemployment checks or social security checks to keep Trump’s hate-filled and anarchy-riddled beliefs front of stage, and to the point of breaking down the doors of the nation’s capitol building.

Here’s the joke: 8 out of 9 of the largest holders of DWAC include the industry’s biggest hedge funds, whose plain-vanilla strategy is to buy SPACs at the initial offering as a means to deploy cash that is not being used by the fund, and with the upside chance the investment will make a profit. Alternatively, stakeholders can redeem or ‘put back’ their holdings to the company at their original cost and get their full investment back after a merger announcement is made. Think of it is as a money market fund that has a “knock-in provision”.

The other largest holder is Arc Global Investments and owns the right to acquire approximately 20% of the authorized shares, which is controlled by none other than Patrick Orlando. Albeit, unlike the nearly 80% of shares acquired by the hedge funds, Arc’s shares have a restriction that prohibits selling those shares for an extended period of time. At least 2 of the 8 hedge funds (SABA Capital and Lighthouse Investors) were owners of several million shares each, and they made tens of millions of dollars inside of two days by unloading their shares to the retail investors, many of whom paid between 500%-1700% more for the shares from the prior day’s price. 

The punchline to the joke: The two funds that acknowledged selling to witless retail investors as the stock was skyrocketing did so because they wanted nothing to do owning a company that might eventually enable a Trump-fueled media enterprise initiative.

Fool Me Once, Shame on You. Fool Me Twice Shame on Me. In addition to the Reddit bandits and followers of Wall Street Bets who bought into the shares of the black-check company that proposes to merge with a still non-existent operating business (other than in name only), hordes of die-hard Donald Trump fans and followers with accounts at Fidelity, Robinhood and TD Ameritrade were believed to have purchased “millions of shares” in the past two days and, according to nearly every professional trader and investment manager in the world, “they paid prices that defied any scintilla of logic; proving that the extent of their education must have been a diploma they received from Trump University.”

Click Here for another MarketsMuse most-read feature stories

EF Hutton is the underwriter for Digital World Acquisition Corp? Adding yet another comedic twist to the story, aside from rumors that Hollywood producer and former Treasury Secretary Steven Mnuchin has purportedly secured the film rights to, so that he can do a remake of the 1949 film classic and Academy Award-winning “All the Kings Men” (which ended with the assassination of corrupt politician Willy Stark by one of his cronies (to put the feature photo of this post into context), the underwriter for Digital World Acquisition Corp, was formerly known as Kingsmark Capital*, and is now going by the name EF Hutton, the once legendary stock brokerage that was best known for its tag line, “When EF Hutton talks, people listen!”


*Kingsmark’s brief history includes underwriting “micro-cap” stocks and SPACs, and acquired the EF Hutton name from the estate of the heirs to the original EF Hutton.

A PIPE Offering is Next? Because Trump spokesperson Liz Harrington stated that “TMGT is worth $1.8 billion” (@realLizUSA­), this would infer that Digital Media Acquisition Corp would need to do a follow-on sale of shares, presumably via a PIPE offering, to raise an additional $1.5 billion in cash that would meet the valuation that Trump believes his non-operating company is worth. Per link above, a PIPE is a private investment in a public equity.

Based on Friday’s closing price, the SPAC company would need, at very least, to nearly double the amount of shares outstanding from 28 million shares to 40 million shares, and to sell those newly-created shares during the “de-SPACing process (which is unlikely to occur for at least another 2-3 months) at Friday’s closing price of $90 via the PIPE offering.

Yes, the total volume on Friday exceeded 130 million shares, and Wall Street syndicate desks managers suggested any secondary sale (2-3 months from now) could be done with no market impact if trade volumes remain the same and the price remains elevated, yet it would also dilute the existing shareholders by nearly 50%.

To the above, one trader suggested “the odds of the DWAC share price remaining at the current exorbitant price level are about equal to the chances the SPAC will be de-listed after an SEC investigation is started; a50-50 probability for either outcome.”

Why should the SEC Investigate? Will Coincidence Kill the Golden Goose and Lead to a De-listing of DWAC?

Some things for Gary Gensler to Consider Before More Retail Investors Get Completely Burned Buying this “SPAC”.

SPACs cannot identify acquisition targets prior to the closing of the IPO. If the SPAC had a specific target under consideration at the time of the IPO, detailed information regarding the target IPO registration statement, potentially including the target’s, would be required to be included in the financial statements

Under the SEC’s rules, a SPAC may not identify a specific target company prior to the closing of its IPO, and the SEC requires the SPAC to disclose in its prospectus that the SPAC does not have any specific target company under consideration, and that neither the SPAC, nor anyone acting on behalf of the SPAC, has engaged in any substantive discussions with a potential target company. In fact, if a non-binding LOI is entered into before the SPAC’s IPO, the SEC may even suggest that it is the target company that should conduct an IPO, not the SPAC, which would defeat the entire purpose of using a SPAC as an investment vehicle and an alternative to a traditional IPO for the target company.

DWAC’s Prospectus states:  “We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.”

Suspicious Behavior? DWAC listed on NASDAQ on September 3; the merger announcement came less than six weeks later. Typically, it takes many months for a SPAC sponsor to research and perform due diligence on many companies before they bring a proposal to SPAC holders.

SPAC Sponsor and CEO of DWAC Patrick Orlando is a “good friend of Donald Trump”.  Orlando resides within a stone’s throw of Trump’s Mar-a-Lago country club and has since acknowledged to the New York Times that he is a “long-time friend of Donald Trump and speaks with him often.”

Collusion or Coincidence? So, is it just a coincidence that Orlando started and completed his due diligence inside of five weeks after the SPAC listed? Or, has there been a major violation of securities regulations, and is the offering prospectus nothing more than toilet paper?

Rule #1: Deny. Deny. Deny. To the above, a Trump spokesperson, speaking off the record (of course!) has since told at least two sources that “Mr. Trump never heard of Patrick Orlando and never communicated with him until weeks after the Digital Acquisition was listed on NASDAQ.”

Really?! At very least, Orlando has already publicly stated that he has been friends with Trump for a number of years and communicates with him ‘frequently’.?

Roma Daravi, a former Trump administration communications executive and the ‘media relations’ representative for TMTG was not available for comment, even if Liz Harrington did comment via Twitter.

Let’s play this back again; DWAC listed on NASDAQ on September 3. Five weeks later they announced proposed merger with Trump’s shell company, TMGT. In the history of SPAC offerings, DWAC has broken the land speed record for listing and then announcing a merger. Their ability to canvass opportunities, perform due diligence on various merger candidates, reach a conclusion, and then execute a merger agreement, all within 5 weeks from the date of listing the SPAC would seem implausible at best, and statistically impossible at worst when considering the average time for this process is 4-6 months.

Let’s try a different angle: The CFO for DWAC is 83 year old Brazilian national Luis Orleans-Braganza. Mr. Orleans-Braganza is a businessman and currently a self-acclaimed “right wing” member of Brazil’s National Congress. Sources say that he has been “a guest at Mar-a-Lago on several occasions” during the past two years.

How About this part of the DWAC Offering Prospectus?

Patrick Orlando’s DWAC Prospectus States “We will identify and complete business combinations with “market-leading companies”. This is identical to the boilerplate verbiage in every SPAC offering document, yet counter-intuitive to the merger announcement if Digital World’s strategy is to identify and complete business combinations with technology-focused, market-leading companies.  For more information, please visit www.dwacspac.com

BUT, TMTG has NO operating business, which would be a cause of concern for the institutional and individual investors who put money into this SPAC based on Patrick Orlando’s representations. TMTG has NO employees of record (other than Trump) and their pitch deck, which appeared on the entity’s website at the same time as the merger news hit the tape, reads as if it was written on a blank whiteboard:

Among other things, the Trump pitch deck, which, unlike any other startup pitch deck, fails to identify any management or key employees that will be executing the business strategy, yet it states: “The group plans to offer alternative media to challenge the traditional social networks like FacebookYouTube and Twitter via a social network called “Truth Social.” One of the slides states “…..envisions to eventually compete against Amazon.com’s AWS cloud service and Google Cloud.”

Other slides suggest “a social network (“Truth Social”) is set for a beta launch next month, and full rollout in the first quarter of 2022, is the first of three stages in the company’s plans, followed by a subscription video-on-demand service called TMTG+ that will feature entertainment, news and podcasts.”

So, we have a blank check company merging with a blank-deck company that is parsing jargon from an array of presentation decks that anyone can download on the internet.  

CAVEAT (EMPTOR): Mr. Orlando’s FINRA record is clean (so far) of any misdeeds. The fact that he worked at Deutsche Bank, the only bank that would extend credit to Trump, is likely a mere coincidence.

As of press time, MarketsMuse has not determined whether any DWAC officers, including CEO Patrick Orlando, spoke with or visited with Mr. Trump at Mar-a-Lago or any place else during the two months in which both Trump Media and DWAC were incorporated. We have yet to obtain evidence as to whether members of Orlando’s team communicated with Trump prior to the SPAC listing.

To the above, given Trump’s penchant for “hiding the potato” and withholding evidence, unless the SEC engages the FBI to trace any and all phone, email and/or burner phone txt communications between the interested parties, Gensler’s enforcement agents who are already overwhelmed with tens of dozens of cases, could face a challenge in their attempt to prove that Orlando and Trump discussed and negotiated a business transaction with DWAC prior to the SPAC listing.

Rudy Guiliani to Defend Trump in any securities litigation? Maybe. Then again, if Trump enlists his favorite lawyer to defend him, despite the fact the former prosecutor and former New York mayor was disbarred from practicing law in in New York (and the District of Columbia), he can still appear in a federal court, which is where any SEC prosecution, as well as any securities class action lawsuits brought by investors, would likely be filed. Sounds like a scene from HBO’s “Succession”.

Boondoggle for Class Action Securities Lawyers: This will create a boondoggle for plaintiff lawyers who specialize in class action litigation on behalf of investors that have lost money buying (and or selling) securities of companies that have blatantly run afoul of securities regulations, including disclosure requirements. Investors residing in New York, Florida, California, Colorado, Massachusetts, and other states should click here for a listing of class action securities attorneys in your state.

securities litigation attorneys DWAC SPAC

Lighthouse Investment Partners shed its holdings in Digital World Acquisition after learning of the deal with Trump’s venture, the fund told CNBC. Lighthouse had owned 3.2 million shares, or 11.2% of the special purpose acquisition company, which trades on NASDAQ, according to a Sept. 30 regulatory filing. 

Saba had owned a 9.3% stake in the SPAC, or 2.4 million shares, according to a Sept. 3 filing.

Other institutional owners that represent the remaining 80% of shares owned in DWAC include Highbridge Capital Management (2 million shares); D.E. Shaw & Co (2,425,000 shares); K2 Principal Fund (1,175,000 shares); ATW SPAC Management LLC (2,425,000 shares); Boothbay Fund Management (2,425,000 shares); Radcliffe Capital Management LP (2,425,000 shares). As of press time, these funds have not yet published updates as to whether they continue to maintain or have liquidated holdings in Digital World Acquisitions Corp.

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