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The US Securities and Exchange Commission (SEC) is prosecuting cryptocurrency influencers who promote fraudulent projects and often manipulate the prices of certain tokens based on their tweets. Former head of the U.S. Securities and Exchange Commission John Reed Stark on Twitter warned such influencers about cryptocurrencies to be prepared to face prosecution.
Attention all cryptocurrency promoters who use social media to manipulate the price of crypto-securities: Fail not at your peril. Not only will you eventually get caught, but your prosecution will also be like shooting fish in a barrel.
Whether manipulating the price of exchange… pic.twitter.com/AfKROIlR0N
— John Reed Stark (@JohnReedStark) May 30, 2023
Stark, in his tweet, named all such social media influencers who sold numerous sketchy cryptocurrency projects and often helped them manipulate market prices during a bull market. He warned that for any form of price manipulation, be it the price of exchange-traded securities, penny securities, or crypto securities, the same anti-fraud regulations apply, and the days of such social media influencers are numbered.
The former head of the SEC drew attention to the brazen and arrogant way in which many social media influencers defraud their victims. Much of this shilling and price manipulation happens through social media such as Twitter, Discord, Instagram or Reddit. Stark noted that the nature of securities fraud makes it easier to detect and prosecute, unlike other forms of fraud where the perpetrator often tries to hide his identity.
“Regulators and law enforcement agencies need only turn on their computers to discover an extraordinary and brilliant chain of evidence of hard and blatant incriminating evidence. Indeed, social media not only does not tie the hands of the government, but has become a virtual rope that many cryptocurrency brothers (and sisters) use to hang themselves.” Stark explained.
Stark went on to give the example of Francis Szabo, a notorious cryptocurrency influencer who was accused of $100 million in securities fraud and used social media platforms to manipulate stocks.
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Apart from Szabo, there have been numerous cases where crypto influencers have violated securities law. The most famous case is that of Kim KarDashkoyan, who was fined $1.26 million for promoting a fraudulent project.
Another major influencer to face the law is cryptocurrency Bitboy, an influencer who has faced a lot of public anger for promoting shady projects. The YouTuber was featured in a $1 billion lawsuit for promoting unregistered securities. Earlier, in November 2022, the SEC also issued a subpoena to several influencers to promote HEX, Pulsechain, and PulseX tokens.