The Securities and Exchange Commission has charged seven Twitter users and a podcaster in an alleged $100 million stock manipulation scheme run through social media, the agency said Wednesday.
According to the SEC, the seven Twitter users also used the Discord messaging app to promote certain stocks to “hundreds of thousands of followers,” and then quietly sold their positions after a run-up in the stocks’ prices.
The alleged scheme dated back to at least January 2020 and involved a nationwide network of participants, including four of the defendants who reside in Texas; two in California; one in New Jersey and one in Florida.
The podcaster named in the case allegedly also engaged in the illicit trading scheme and promoted the other defendants as expert traders, according to the SEC.
CNN reviewed a number of archived tweets belonging to one of the defendants. The account associated with the defendant tweeted frequently last May about Gamestop and AMC, two so-called “meme stocks” that saw significant public interest and trading last year.
The SEC’s complaint calls for the US District Court for the Southern District of Texas to impose fines and to require that the defendants give up their allegedly ill-gotten gains, along with a ban on future misconduct.
The Justice Department simultaneously filed separate criminal fraud charges against the defendants, the SEC said.
The alleged scheme was active until about April of this year, according to a Justice Department release, and resulted in at least $114 million in profits.
Altogether, the defenders had more than 1.5 million Twitter followers. Two of the defendants allegedly ran a group on Discord known as Atlas Trading. Launched in 2018, the Atlas group had grown to 150,000 members by early last year, according to a copy of the SEC complaint.
Other alleged members of the scheme helped promote Atlas on various platforms, the complaint said, and in some cases knowingly discussed their market manipulation on Discord voice chats whose transcripts the SEC included in the complaint.
The criminal charges include conspiracy to commit securities fraud and, for several of the defendants, multiple counts of securities fraud. Each of the charges carries a maximum possible sentence of 25 years in prison.
Both the SEC and the Justice Department said a government investigation is still ongoing.