Seven social media influencers and one podcast host were indicted in a federal court for allegedly using Twitter and Discord to pump and dump stocks to their millions of followers.
The influencers hyped certain stocks by posting misleading information and concealing their intent to sell the securities at an inflated press, according to a Department of Justice (DOJ) press release.
The scheme brought in approximately $114 million over the course of two years, the DOJ estimated.
JUST IN: 🇺🇸 SEC charges 8 social media influencers in $100 million stock manipulation scheme promoted on Discord and Twitter.
— Watcher.Guru (@WatcherGuru) December 14, 2022
“We are committed to protecting the investing public from market manipulation schemes, regardless of how they are carried out,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas.
“As some use advances in technology and social media to prey upon the public, our office will be on the cutting edge of prosecuting this area of fraud,” Hamdani added in the press release.
The influencers collectively had over 1.5 million Twitter followers and ran a large stock trading chat room on Discord, according to the indictment. (RELATED: Musk Posts Cryptic Tweet After Calling For Fauci To Be Prosecuted)
They allegedly manipulated followers by posting pictures of lavish lifestyles and investing profits that they encouraged followers to get for themselves, the press release says.
Some of the defenders placed disclaimers about their investment advice to try to mitigate legal risk, CNBC reported.
Each defendant faces a maximum of 25 years in prison if convicted for conspiracy to commit securities fraud and each count of securities fraud, the DOJ said.
The eight individuals have also received civil charges by the Securities and Exchange Commission (SEC) for alleged market manipulation, the SEC said in a press release.
“Today’s action exposes the true motivation of these alleged fraudsters and serves as another warning that investors should be wary of unsolicited advice they encounter online,” said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, in the press release.
The eighth individual hosted a podcast to promote the influencers as experts and give them a platform to spread false information, according to the SEC. He traded stocks with the influencers and made profits from the alleged market manipulation.