Eight individuals promoted deceptive demand for stocks via Twitter, Discord and YouTube to sell their shares at a high point.
The United States Securities Exchange Commission (SEC) filed a claim against eight individuals associated with Atlas Trading, a Discord-based forum. The forum’s co-founders, affiliated podcasters and Youtubers are being alleged of stock manipulation.
The claim was filed with the U.S. District Court Southern District of Texas on Dec. 13. The regulator accuses the defendants of violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act.
According to the SEC, bloggers made no less than $100 million by acquiring substantial positions in some securities, recommending those stocks to their followers and then selling their shares into the demand that their “deceptive promotions” generated. Alzamend Neuro, Torchlight Energy Resources and ABVC companies were cited as examples of fraudulent stock promotion. No cryptocurrencies or other digital assets were mentioned in the complaint.
The list of defendants includes Edward Constantin (aka “MrZackMorris), a co-founder of Atlas Trading; the “CEO” of the same forum, Perry Matlock; the authors of a YouTube channel “Goblin Gang,” Thomas Cooperman and Gary Deel; the hosts of the “Pennies: Going in Raw” podcast, Mitchell Hennessey and Daniel Knight; the founder of Sapphire Trading forum, John Rybarcyzk; and a Twitter influencer Stefan Hrvatin ( aka “LadeBackk”).
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While Constantin, Matlock, Cooperman, Deel, Hennessey, Hrvatin, and Rybarcyzk are qualified as “primary defendants” by the plaintiff, Knight was allegedly “aiding and abetting” them. The Commission seeks a permanent injunction for defenders to restrain from engaging in any practices of the type alleged in the complaint, which could effectively mean giving advice on stock trading.
The SEC has been busy recently, charging the former FTX CEO Sam Bankman-Fried, of defrauding U.S. customers and concealing the diversion of customers’ funds, and taking further steps to stop Grayscale Investments’ efforts to launch a Bitcoin exchange-traded fund (ETF).