Thursday 22 Feb 2024
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KUALA LUMPUR (Dec 15): A federal grand jury in the Southern District of Texas returned an indictment that was unsealed on Wednesday (Dec 14) charging eight men with conspiracy to commit securities fraud for a long-running, social media-based “pump and dump” scheme.

In a statement on its website on Wednesday, the US Department of Justice (DOJ) said the men were allegedly engaged in a wide-ranging securities fraud conspiracy in which the defendants used their extensive social media presence on Twitter and Discord to hype interest in particular securities by posting false and misleading information in order to “pump” the prices of those securities, while concealing their intent to later “dump” their shares by selling them at the artificially inflated prices.

It said from in or around January 2020 to in or around April 2022, the defendants profited at least approximately US$114 million from their scheme.

According to the indictment, the defendants collectively had over 1.5 million followers on Twitter to whom they allegedly disseminated false and misleading information about the securities that they pumped and dumped as part of the charged scheme.

In addition to their Twitter presence, the defendants also allegedly ran an online community for individual stock traders called Atlas Trading, which the defendants promoted as one of the largest, free online communities in the world for individual stock traders and had a chatroom called Atlas Trading Discord.

The defendants also allegedly used Atlas Trading Discord to disseminate false and misleading information about securities that they pumped and dumped as part of the charged scheme.

The DOJ said the defendants used their social media credibility to maximise their own profits at the expense of their followers, holding themselves out as skilled stock traders by posting pictures showcasing their profits and extravagant lifestyles, and encouraging people to follow them on social media in order to share in their financial gains.

The defendants made their initial court appearances on Wednesday. If convicted, each defendant faces a maximum penalty of 25 years in prison for conspiracy to commit securities fraud and each charged count of securities fraud.

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