The SEC has started to clamp down on crypto influencers, issuing several fines and cease and desist orders in the past few years.
The United States Securities and Exchange Commission (SEC) is going after crypto influencers who have promoted scam projects and are often found manipulating the prices of certain tokens based on their tweet. Former SEC Chief John Reed Stark took to Twitter to warn such crypto influencers to be ready to face prosecution.
Attention all crypto promoters who use social media to manipulate the price of crypto-securities: Fail not at your peril. Not only will you eventually get caught, but your prosecution will also be like shooting fish in a barrel.
Whether manipulating the price of exchange… pic.twitter.com/AfKROIlR0N
— John Reed Stark (@JohnReedStark) May 30, 2023
Stark in his tweet called out all such social media influencers who shilled numerous sketchy crypto projects and often helped them to manipulate market prices during the bull run. He warned that for any form of price manipulation, be it the price of exchange-listed securities, penny stock securities or crypto-securities, the same anti-fraud rules apply and the days of such social media influencers are numbered.
The former SEC chief drew attention to the brazen and arrogant way in which so many social media influencers grift their victims. Most of these shilling and price manipulation occur via social media platforms such as Twitter, Discord, Instagram or Reddit. Stark noted that the nature of securities fraud makes it easier to detect and prosecute unlike other forms of fraud where the perpetrator often tries to hide behind their 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.” Stark explained.
Stark went on to cite the example of Francis Sabo, a notorious crypto influencer, who was charged in a $100 million security fraud case and used social media platforms to manipulate exchange-traded stocks.
Apart from Sabo, there have been numerous instances of crypto influencers found to be in violation of securities law. The most famous case is that of Kim Kardashian who was fined $1.26 million for promoting a scam project.
Another major influencer to face the law is Bitboy Crypto an influencer who has faced a lot of public ire for promoting shady projects. The YouTuber was named in a $1 billion lawsuit for promoting unregistered securities. Earlier in November 2022, SEC also issued a subpoena to multiple influencers for promoting HEX, Pulsechain and PulseX tokens.