The conspiracy is linked to Digital World Acquisition Corp. (DWAC), the shell company responsible for taking former President Trump's social media venture public.

The Shvartsmans, both Florida venture capitalists, each pleaded guilty to one count of securities fraud, which carries a maximum prison sentence of 20 years. U.S. District Judge Lewis Liman has scheduled their sentencing hearing for July 17.

According to the Department of Justice, the brothers illegally traded on nonpublic information in October 2021 related to DWAC's acquisition of Trump Media & Technology Group, the parent company of the social media network Truth Social. The confidential information obtained by the Shvartsmans included details about the merger's timeline, leading them to purchase millions of dollars' worth of DWAC securities before the public announcement of the merger with Trump Media.

U.S. Attorney Damian Williams emphasized the seriousness of their actions, stating, "Michael and Gerald Shvartsman admitted in court that they received confidential, inside information about an upcoming merger between DWAC and Trump Media and used that information to make profitable, but illegal, open-market trades."

Insider trading, Williams added, is a clear act of cheating, and he hopes that these convictions serve as a reminder that anyone attempting to manipulate the integrity of the stock market will face severe consequences.

Last June, the Shvartsmans were arrested alongside Bruce Garelick, a former employee of Michael Shvartsman's Rocket One Capital venture firm. Garelick, who served on DWAC's board of directors, allegedly provided crucial information about the impending deal in 2021 to the brothers. Garelick is set to go to trial at the end of this month.

While an attorney for Michael Shvartsman declined to comment, the attorneys representing Gerald Shvartsman and Bruce Garelick did not respond immediately to requests for comment.

This case serves as a stark reminder of the legal and ethical boundaries within financial markets and underscores the ongoing efforts to maintain the integrity of the stock market.