Social media influencers under the scrutiny of the Securities and Exchange Commission (SEC) for a $100 million securities fraud scheme.
The SEC is tightening its effort to keep the influencers shilling fraud investment instruments in check. It filed lawsuits against eight social media influencers that used Twitter and Discord to manipulate the exchange-traded stocks.
The SEC also recently filed charges against the disgraced founder of the FTX exchange, Sam Bankman-Fried. He faced charges for orchestrating a scheme to defraud equity investors in FTX Trading Ltd.
The SEC Targets Social Media Influencers for $100 Million Fraud
According to SEC, the social media influencers claimed to be successful traders since Jan. 2020 and used their following on Twitter and Discord to manipulate stock prices.
The seven influencers listed in the screenshot below face allegations of luring their followers to trade certain securities and then getting out of those trades without disclosing their exit. They are accused of making $100 million in profits by such fraudulent means.
Whereas the podcaster Daniel Knight is the eighth influencer charged with promoting some of the above-listed influencers as experts in his podcast. He also participated in the pump-and-dump trades with other influencers.
Joseph Sansone, the Chief of the SEC Enforcement Division’s Market Abuse Unit, states:
“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.”
The Community Lashes out at the SEC
The community has not taken the announcement of charges on influencers very well. They call out SEC for only going after the low-hanging fruits. Twitter users accuse SEC of ignoring real thieves like banks and hedge funds.
The community questions when the SEC will take action against the Tesla CEO, Elon Musk. Elon’s tweets have influenced the price of certain stocks like GameStop and some cryptocurrencies, notably Dogecoin.
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