The U.S. Securities and Exchange Commission (SEC) is pursuing crypto influencers who promoted scam projects and were discovered manipulating the prices of specific tokens via social media.
Former SEC chief John Reed Stark warned crypto influencers on Twitter to be prepared for prosecution.
In his tweet, Stark criticized social media crypto influencers who promoted numerous dubious crypto projects and frequently assisted them in manipulating market prices during the bull run.
He warned that the same anti-fraud rules apply to any form of price manipulation, whether it involves exchange-listed securities, penny stock securities, or crypto securities, and that the days of social media crypto influencers are numbered.
The former head of the SEC drew attention to the daring and arrogant manner in which numerous social media influencers scam their victims.
The majority of shilling and price manipulation takes place on social media platforms such as Twitter, Discord, Instagram, and Reddit.
Stark observed that the nature of securities fraud makes it easier to detect and prosecute, in contrast to other types of fraud in which the perpetrator frequently attempts to conceal 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.
Francis Sabo, who was charged in a $100 million securities fraud case and used social media platforms to manipulate exchange-traded stocks, was cited as an example by Stark.
In addition to Sabo, numerous crypto influencers have been found to have violated securities laws. Most notably, Kim Kardashian was fined $1.26 million for promoting a scam project.
Bitboy Crypto, a prominent influencer who garnered much public ire for promoting shady projects, is the second influential figure to face legal action.
On March 31, the YouTuber was charged with fostering unregistered securities in a $1 billion lawsuit, and the SEC issued multiple subpoenas to influencers in November 2022 for promoting Hex (HEX), Pulsechain (PLS), and PulseX (PLXX) tokens.
