Authorities Charge Online Influencers In $100 Million Pump-And-Dump Scheme

SEC authorities charge online influencers allegedly involved in a $100 million securities fraud scheme.

According to the US Securities and Exchange Commission, they used social media platforms Discord and Twitter to manipulate exchange-traded stocks.

Seven defendants allegedly bought specific shares and then asked their followers to buy those stocks. Also, one reportedly co-hosted a podcast to facilitate their scheme and profited from it.

How did the social media influencers operate their scheme?

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The first seven online influencers reportedly posted their price targets for spot trading. Specifically, that is a stock trading method that involves buying or selling a stock once it reaches an exact price.

Also, they suggested that they were buying, holding, or adding to their stock positions. In other words, they were likely engaged in derivatives trading.

It is another stock trading method that involves borrowing shares to profit from their price increase or decrease.

As more people buy the stocks, their prices increase. According to the SEC, the influencers sold their stocks and closed their positions to secure profits.

Unfortunately, they did not inform their followers beforehand. Here are the names of these influencers: 

1. Perry Matlock (@PJ_Matlock)
2. Edward Constantin (@MrZackMorris)
3. Thomas Cooperman (@ohheytommy)
4. Gary Deel (@notoriousalerts)
5. Mitchell Hennessey (@Hugh_Henne)
6. Stefan Hrvatin (@LadeBackk)
7. John Rybarczyk (@Ultra_Calls)

The SEC also lists an eighth defendant named Daniel Knight, known as @DipDeity on Twitter. 

He allegedly aided the seven influencers by co-hosting a podcast where he promoted them as expert traders. Also, he provided them with a forum for their manipulative statements.

The SEC said that Knight also traded along with the other influencers and earned profits from their scheme.

The SEC complaint “seeks permanent injunctions, disgorgement, prejudgement interest, and civil penalties against each defendant, as well as a penny stock bar against Hrvatin.”

Moreover, the Department of Justice’s Fraud Section and the US Attorney’s Office for the Southern District of Texas filed a parallel action against the eight individuals.

The SEC filed a complaint in the US District Court for the Southern District of Texas in response. At the time of writing, the institution is still investigating the issue.

Conclusion

SEC authorities charge online influencers in a $100 million stock manipulation scheme. They allegedly used Discord and Twitter to encourage followers to buy specific stocks to increase their value.

Then, the influencers sold their shares without the followers knowing. Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, had a few words about the issue:

“Today’s action exposes the true motivation of these alleged fraudsters and serves as another warning that investors should be wary of unsolicited advice they encounter online.”