Trading firms paying for early access to President Donald Trump's Truth Social posts could face criminal insider trading charges, a former Justice Department official warned Thursday.
Former Assistant Attorney General Jonathan Kanter, during an appearance on CNBC, argued Truth Social users could be putting themselves in danger if they participated — and pointed to a federal lawsuit filed against the social media company to explain why.
"The rub here is that the president is the largest shareholder of Truth Social's parent company and that he is benefiting financially from the early access," Kanter told CNBC. "And so this is effectively — as the argument goes in the lawsuit — the president selling access to government information to traders before the public gets it more broadly."
The Truth Social API was launched on Aug. 1 by Trump Media & Technology Group, charging subscribers between $60,000 and $100,000 a month for millisecond-faster access to Trump's market-moving posts, according to NBC News.
Trump owns roughly 41% of Trump Media through a trust, according to regulatory filings.
The arrangement is now the subject of a federal lawsuit filed Wednesday in the Southern District of New York by The Intercept and the Freedom of the Press Foundation, according to court filings.
The plaintiffs argue Truth API violates the First and Fifth Amendments by giving paying customers preferential access to a sitting president's official announcements.
Kanter alerted potential traders to a niche form of insider trading that could be linked to the scheme.
"Insider trading liability doesn't just apply to the person who's giving the information," he said, "it can also apply to the person who's trading on the information — what we call tippee liability."
"[Y]ou could have a situation where four years from now they are investigated for insider trading — both as individuals and their companies as well," he added.
Because the statute of limitations extends beyond Trump's term in office, the former DOJ official pointed out that "folks who are using this API to trade need to be careful."
Rep. Jamie Raskin (D-MD) launched a formal congressional investigation into Truth API on July 31, demanding records from Trump Media, his office said.
"This White House-Wall Street-Trump-Business feedback loop represents the depraved essence of insider trading," Raskin wrote.
Trump Media spokeswoman Shannon Devine rejected the criticism, telling NPR that Truth API "offers customers the fastest way to ingest publicly available Truth Social data."
Sen. Alex Padilla (D-CA) introduced the Stop Corrupt Trading Act on Aug. 3, his office announced, and a House counterpart followed days later — together the bills would ban the practice and impose civil and criminal penalties for selling or buying early access to presidential statements.
