Gab Moves to Withdraw SEC Filing Amid Growing Financial Challenges
Gab, best known for operating an online space where white supremacists organize, abruptly withdrew its request to sell stocks to finance the company.
The March 22 filing with the U.S. Securities and Exchange Commission by Gab AI, Inc., Gab’s parent company, signals a major shift in the controversial company’s business strategy. Gab’s long-term business plan focused on raising hundreds of millions of dollars through public stock sales to build an alternative to Twitter and Facebook, as Hatewatch reported in January. Hatewatch then reported in February that a person working for Gab’s web host expressed doubts about claims the company made in its Dec. 19 and Jan. 28 SEC filings about the size of its userbase.
And now Gab CEO Andrew Torba has changed course. In the withdrawal, Torba did not indicate what his actions could mean for the company’s future. The document states only, “The Company files the withdrawal of the Offering Statement because it has decided to seek other capital raising alternatives.”
Torba did not respond to a text message from Hatewatch seeking comment on this story and has not mentioned the application for withdrawal on his Gab account or the company’s verified Twitter handle.
Struggles with payments
Gab’s inability to offer consistent credit card processing services – which are critical to its business model – exacerbates its precarious financial situation.
After October’s domestic terror attack at the Tree of Life synagogue in Pittsburgh, Gab suffered a series of financial setbacks.
Robert Bowers, a verified Gab user who posted hateful statements about Jews, is accused of murdering 11 worshippers at the synagogue. Immediately after the shooting, Gab was dropped by its internet registrar, GoDaddy, its web hosting provider, Joyent, and two payment processing companies, PayPal and Stripe. The actions knocked Gab offline for six days.
On Jan. 22, Torba began using an obscure company called 2nd Amendment Processing to handle its credit card transactions, and urged other business owners on Twitter to “consider switching to our payment processing partner.” Credit card transactions, at least for a brief spell, appeared to work on the site again after that announcement.
Two months later, however, Gab accepts only cryptocurrency payments and checks via snail mail from its paying customers – just as it did in the immediate aftermath of the Tree of Life terror attack. Gab has not explained why 2nd Amendment Processing’s services do not appear on the site.
Hatewatch reported March 7 that Thomas Michael Troyer, the man who founded 2nd Amendment Processing, was convicted of financial crimes in 2007 and had changed his name from Thomas George Burger II. Troyer did not respond to a request for comment for this story.
Renewed attention on fringe platforms
Gab’s abandonment of its initial financial plan coincides with a moment when fringe websites that allow space for white supremacists to organize have come under increased scrutiny.
8chan, another loosely moderated website, played a pivotal role in spreading propaganda created by Brenton Tarrant, the Australian man accused of murdering 50 worshippers in two New Zealand mosques March 15.
Tarrant has not been linked to Gab, but members of the site praised the murder suspect, drawing public criticism. Christopher Cantwell, who has made racist, misogynistic and transphobic comments on his podcasts, further enmeshed Gab in controversy when he appeared to suggest in a March 17 Gab post that would-be killers should target left-wing activists for murder.
Gab suspended Cantwell’s account March 18, removing a user that once drove a significant amount of interaction on the small site.
After Cantwell’s suspension, Epik, the controversial “free speech” branded domain registrar that picked up Gab following the Tree of Life attack, released a statement attempting to distance itself from the troubled site’s content.
“Epik.com has a long history of standing for free speech. This became more visible with our decision to allow the domain name Gab.com to be transferred from GoDaddy to Epik,” the company wrote from its Twitter account March 21. “Allowing a domain to exist does not imply endorsement of content published on a website.”
