The former SEC chairman hinted that influencers adopt various strategies to deceive and mislead their followers into making imprudent investment decisions.
The US Securities and Exchange Commission (SEC) is increasing its efforts to regulate and enforce compliance among crypto influencers, with former SEC Chairman John Reed Stark issuing a stern warning about potential prosecutions.
In a tweet on Wednesday, Stark, who headed the SEC’s cyber enforcement unit for 11 years, warned cryptocurrency social media figures who have endorsed shady projects and engaged in price manipulation in the past, assuring them that their end is near. . .
According to Stark, the days of crypto social media influencers operating without accountability are coming to an end. He emphasized that the same anti-fraud regulations apply to all forms of price manipulation, whether it be related to listed securities, penny stocks, or crypto assets.
Beware of all the cryptocurrency promoters using social media to manipulate the price of cryptocurrency securities: it is not your fault to fail. Not only will you get caught in the end, but being pursued will also be like shooting a fish in a barrel.
Whether to manipulate the exchange rate… pic.twitter.com/AfKROIlR0N
John ReedStark May 30, 2023
Social media price manipulation schemes
In his tweet, the former SEC chairman hinted that influencers adopt various strategies to deceive and mislead their followers into making imprudent investment decisions.
He also noted that these characters use social media platforms such as Twitter, Discord, Instagram, and Reddit to commit fraud, and take advantage of the popularity of the platforms to attract their victims.
Unlike other scams, Stark said securities frauds can be easily detected and violators cannot hide their tracks from the authorities. According to him, law enforcement only needs to turn on their computers to detect trails of evidence that lead to crimes.
“Regulators and law enforcement need only turn on their computers to discover an extraordinary and fascinating trail of compelling and vital forensic evidence. Indeed, far from tying the government’s hands, social media has become the virtual rope many crypto brothers (and sisters) use to hang themselves,” He said Stark.
US SEC crackdowns on crypto influencers
Stark cited the case of famous cryptocurrency attorney Francis Sabo, who recently faced charges in a $100 million securities fraud case.
According to the complaintSabu, aka Ricky Bobby, has promoted himself as a “trustworthy stock picking expert”, which helped him gain a core following on the Atlas Trading Discord forum, where users are educated about trading and the stock market.
Sabu bought some shares and convinced his followers to buy the same tokens. He posted price targets indicating he was buying, holding, or adding to his equity positions to demonstrate that he owns the asset.
The SEC had previously charged other cryptocurrency influencers and celebrities with securities violations. Last year, the regulator fined billionaire Kim Kardashian $1.26 million for endorsing a fraudulent crypto project called EthereumMax (EMAX). Other celebrities, such as Floyd Mayweather, also took part in the project.
Recently, Bitboy Crypto, an influencer who has faced public criticism for promoting questionable crypto projects in the past, was named in a $1 billion lawsuit for endorsing unregistered securities.
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