Eight individuals, associated with Atlas Trading promoted deceptive demand for stocks via Twitter, Discord and YouTube to sell their shares.
Eight individuals connected to Atlas Trading, a Discord-based community, were named in a complaint by the United States Securities Exchange Commission (SEC).
Co-founders of the forum, podcasters, and YouTubers who are connected to them are accused of manipulating stock.On December 13, the lawsuit was submitted to the U.S. District Court for the Southern District of Texas. The regulator accuses the defendants of violating section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act.
By taking significant positions in certain securities, advocating those stocks to their followers, and then selling their shares when demand increased as a result of their “deceptive marketing,” bloggers allegedly profited at least $100 million, according to the SEC.
As examples of dishonest stock promotion, Alzamend Neuro, Torchlight Energy Resources, and ABVC firms were given. There was no mention of bitcoins or other digital assets in the case.
On the list of defendants are Atlas Trading co-founder Edward Constantin aka MrZackMorris, “CEO” of the same forum Perry Matlock, the authors of YouTube channel Goblin Gang Thomas Cooperman and Gary Deel, the hosts of the Pennies: Going in Raw podcast hosts Mitchell Hennessey and Daniel Knight, founder of Sapphire Trading forum John Rybarcyzk and a Twitter influencer Stefan Hrvatin aka LadeBackk.
The lawsuit classifies Constantin, Matlock, Cooperman, Deel, Hennessey, Hrvatin, and Rybarcyzk as “principal defendants,” while Knight is accused of “aiding and abetting” those individuals.
The Commission is asking for a court order that would prevent defense attorneys from engaging in any of the actions listed in the complaint, which could essentially include giving stock trading advice.
Sam Bankman-Fried, the former CEO of FTX, has been accused of defrauding American customers and concealing the divergence of customer funds. The SEC has also taken additional steps to thwart Grayscale Investments’ attempts to launch a Bitcoin exchange-traded fund (ETF).
