U.S. SEC Charges Charges Eight Twitter Influencers in $100 Million Stock Pump-And-Dump Scheme

SEC files fraud complaint against social media influencers
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Welcome to CyberFinance! The U.S. Securities and Exchange Commission (SEC) announced charges against eight individuals in a $100 million securities fraud scheme in which they used the social media platforms Twitter and Discord to manipulate exchange-traded stocks. According to the SEC, seven of the defendants promoted themselves as successful traders and cultivated hundreds of thousands of followers on Twitter and in stock trading chatrooms (boiler rooms) on Discord.

These seven defendants allegedly purchased certain stocks and then encouraged their substantial social media following to buy those selected stocks by posting price targets or indicating they were buying, holding, or adding to their stock positions. However, when share prices and/or trading volumes rose in the promoted securities, they regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.

As our complaint states, the defendants used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits of approximately $100 million,”

Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit

At the time of the SEC Announcement on December 14, 2022, all but one of the Twitter accounts were still active. The following seven individuals were charged with securities fraud:

The complaint further charges Daniel Knight (Twitter Handle @DipDeity), with aiding and abetting the alleged scheme by, among other things, co-hosting a podcast in which he promoted many of the other individuals as expert traders and provided them with a forum for their manipulative statements. Knight also traded in concert with the other defendants and regularly generated profits from the manipulation.

The SEC’s complaint seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against each defendant, as well as a penny stock bar against Hrvatin. Criminal charges against all eight individuals also were filed in a parallel action brought by the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

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