Since Truth API was announced, some have raised the potential for insider trading to occur. The practice, which is illegal, involves people making market trades or bets based on information that is not available to the general public.
Richard Painter, former chief ethics lawyer to President George W Bush, told the BBC even if Trump does not trade himself on US government information, there was the so-called “tipper-tippee liability” under insider trading laws.
“If I have information that belongs to the United States government that I’m not allowed to trade on, and instead of trading, I simply give the information to someone else who pays me for the information and they trade and I know they’re likely to trade, then I am also guilty of insider trading and so are they,” Painter says.
“This is the law that applies to the president and to everyone else,” he adds.
Painter says the law would only apply to certain subject matters and potential posts, such as what the president intends to do with tariffs, wars or other US policy.
“If I were commissioner of the SEC, I would threaten to resign unless they put a stop to this plan or promise that no posts… that have to do with US government business [will be included],” he says.
Political opponents of the president have criticised the service. Democratic Senators Elizabeth Warren and Adam Schiff have written to the US securities regulator to ask if it will investigate whether Truth API breaks the law.
The Securities and Exchange Commission (SEC) has confirmed receipt of the letter, but has declined to comment on whether it will investigate.
A spokesperson for TMTG said in response to the letter sent to the SEC that Senate Democrats “continue to mischaracterise Truth API either out of ideological opposition to free markets or a failure to grasp the distinction between public and non-public information – or, quite possibly, both”.
TMTG has also said “the Senators must have invented a new theory of ‘insider trading’ based on publicly available information”.
Joe Saluzzi, co-founder of Themis Trading, though, points out that many other data providers, news organisations and stock exchanges currently operate similar services, suggesting that provides a “precedent” for TMTG.
However, he adds: “There’s a different story when it comes to ethics.”
Trump, who owns about 41% of Trump Media through a trust his children oversee, does stand to profit from the service.
“This appears to be an outrageous abuse of the President’s office for his personal benefit that undermines everyday investors and the integrity of our markets, while enriching Wall Street and other wealthy insiders,” Warren and Schiff said in their letter to SEC.
