- SEC actively pursuing crypto influencers promoting fraudulent projects and manipulating token prices on social media.
- Stark warns crypto influencers of potential consequences and urges them to prepare for legal prosecution.
- Cases involving Kim Kardashian, Bitboy Crypto, and subpoenas to influencers highlight regulatory scrutiny in crypto.
The Securities and Exchange Commission (SEC) of the United States is actively pursuing individuals in the crypto industry who have engaged in promoting fraudulent projects and manipulating token prices through social media. John Reed Stark, a former chief of the SEC, utilized Twitter as a platform to caution crypto influencers about the potential consequences they may face and urged them to prepare for legal prosecution.
Stark’s tweet addressed the misconduct of crypto influencers on social media who actively endorsed dubious cryptocurrency projects and played a role in manipulating market prices, particularly during the bullish market period. He emphasized that regardless of the type of securities involved, whether they are exchange-listed, penny stocks, or cryptocurrencies, the same anti-fraud regulations apply, and the era of social media crypto influencers is approaching its end.
The former SEC chief highlighted the audacious and arrogant tactics employed by numerous social media influencers to deceive unsuspecting individuals. He pointed out that the majority of shilling and price manipulation takes place on popular social media platforms such as Twitter, Discord, Instagram, and Reddit. Stark acknowledged that securities fraud, due to its distinctive nature, can be more easily identified and prosecuted compared to other forms of fraud, where the wrongdoer often attempts to conceal their true identity.
Regulators and law enforcement need only turn on their computers to discover an extraordinary and resplendent evidentiary trail of compelling and vivid inculpatory evidence. Indeed, far from tying the government’s hands, social media has become the virtual rope that many crypto bros (and sisters) use to hang themselves.
John Reed Stark
Stark specifically referenced the case of Francis Sabo, a well-known crypto influencer, who faced charges in a significant securities fraud scheme amounting to $100 million. Sabo utilized social media platforms to manipulate the prices of stocks traded on exchanges, illustrating the extent to which certain influencers exploit these channels for fraudulent activities.
Several notable cases have emerged involving crypto influencers who have been found to violate securities laws. One prominent instance involves Kim Kardashian, who gained widespread attention for promoting a fraudulent project and subsequently received a fine of $1.26 million.
Another significant influencer, Bitboy Crypto, faced legal repercussions for endorsing questionable projects. On March 31, the YouTuber was named in a substantial $1 billion lawsuit for promoting unregistered securities. Additionally, in November 2022, the SEC issued multiple subpoenas to influencers who were involved in promoting tokens such as Hex (HEX), Pulsechain (PLS), and PulseX (PLSX).
These actions demonstrate the regulatory scrutiny surrounding influencers and their involvement in the cryptocurrency space.
