Digital World Acquisition fell 7% on Wednesday, extending its six-day decline to more than 30%.
The SPAC's merger target Truth Social threatened to sue the SEC, alleging political bias delayed its proposed merger with Digital World.
But Digital World has been unable to attract the 65% of shareholders needed to approve the business combination.
Digital World Acquisition saw its stock price fall as much as 7% on Wednesday, extending its six-day decline to as much as 30% as the company struggles to close its proposed merger with Truth Social.
Since Digital World first announced its deal with Truth Social last year, the SPAC has plunged 90% from its record high of $175 per share. The most recent decline has been compounded by Digital World's inability to close the merger with Truth Social before its deadline.
But Truth Social believes the SEC is to blame for the delayed deal with the SPAC, according to a Wednesday regulatory filing.
"The SEC has stalled its review of our planned merger with DWAC, having failed to act despite DWAC having filed its registration statement more than four months ago. This inexcusable obstruction, which directly contradicts the SEC's stated mission, is damaging investors and many others who are simply following the rules and trying to expand a successful business," Truth Social said.
"In light of the obvious conflicts of interest among SEC officials and clear indications of political bias, TMTG is now exploring legal action against the SEC. Despite the increasing weaponization and politicization of government agencies, Truth Social will continue its expansion plans, supported by the unprecedented levels of user engagement on the platform," the company added.
One factor holding up the deal not mentioned in Truth Social's statement is the fact that Digital World has been unable to attract the 65% of shareholders needed to approve the business combination. An initial shareholder vote failed to pass earlier this month, and the vote has since been delayed to mid-October in an attempt to garner more votes.
With continued uncertainty that Digital World will be able to receive the necessary amount of votes by mid-October, the SPAC's sponsor deposited about $3 million to extend the potential deal deadline to December 8.
But if a deal is unable to get done, like many SPACs today, Digital World may be forced to liquidate and return the money it raised from investors.