SEC Charges Eight Social Media Influencers With Stock Scam

• SEC charges eight social media influencers in a stock manipulation scheme.
• In total, they gained at least $100 million through ill-gotten gains.
• Misinformation was fed to novice followers and influencers through Discord and Twitter.

The Securities and Exchange Commission (SEC) and Department of Justice (DOJ) charged eight celebrities on Twitter and Discord in an alleged $100 million stock manipulation scheme, also known as “pump and dump.”

According to a press release by SEC, seven of the defendants promoted themselves as successful traders and lured thousands of followers on Twitter and Discord. The defendants allegedly purchased stock and encouraged their followers to buy the selected stocks, indicating they were buying, holding, or adding to their stock positions.

It further reads,

When share prices and/or trading volumes rose in the promoted securities, the individuals regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them.

Additionally, the eighth defendant, Daniel Knight, was alleged of assisting and promoting the scam on his podcast, “Pennies: Going in Raw.”

According to the court documents, in January 2020, they began the scheme and cultivated large followings on Twitter and trading chat rooms on Discord.

Further, the Justice Department’s Fraud Section filed criminal charges against all eight defendants and the U.S. Attorney’s Office in the Southern District of Texas.

Each defendant faces a maximum sentence of 25 years in prison if convicted of conspiracy to commit securities fraud. From around January 2020 to April 2022, the DOJ estimated the group profited $114 million.

Social media and investment fraud have been highlighted in an Investor Alert from the SEC’s Office of Investor Education and Advocacy. Additional information, including fraud warning signs, can be found at Investor.gov.