The US Securities and Exchange Commission (SEC) has sued eight individuals associated with Atlas Trading, a Discord-based forum. Forum founders, affiliate podcasters, and YouTubers are accused of stock manipulation.
The lawsuit was filed in the US District Court for the Southern District of Texas on December 13. The regulator accuses the defendants of violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Trading Law.
According to the SEC, the bloggers made at least $100 million by taking large positions in a few stocks, recommending those stocks to their followers, and then selling their shares to demand generated by their “misleading promotions.” Alzamend Neuro, Torchlight Energy Resources, and ABVC were cited as examples of fraudulent stock promotion. No cryptocurrency or other digital asset was mentioned in the complaint.
The defendants include Atlas Trading co-founder Edward Constantine, aka MrZackMorris, “CEO” of the same forum Perry Matlock, YouTube Goblin Gang creators Thomas Cooperman and Gary Deel, and Pennies: Going on Raw podcast hosts Mitchell Hennessey and Daniel Knight. Sapphire Trading Forum founder John Rybarcyzk and Twitter influencer Stefan Hrvatin aka LadeBackk.
While Konstantin, Matlock, Cooperman, Dale, Hennessy, Hrvatin, and Rybaresque were designated as “primary defendants” by the plaintiff, Knight was alleged to have been “aiding and abetting” them. The committee is seeking a permanent injunction that the advocates refrain from engaging in any practices of the kind alleged in the complaint, which could effectively mean offering advice on stock trading.
The Securities and Exchange Commission has been busy recently, charging former FTX CEO Sam Bankman-Fried with defrauding US clients and concealing misappropriation of client funds, and taking other steps to thwart Grayscale Investments’ efforts to launch a Bitcoin exchange-traded fund (ETF).