Parading as finance experts, eight social media influencers reap $114 million off of unsuspecting followers

United States prosecutors on Wednesday charged eight social media influencers with fraud over the allegations of illegally pushing stocks on novice traders via Twitter and Discord.

Reportedly the individuals reaped about $114 million off of unsuspecting followers by purporting to be successful traders on the above-mentioned social media platforms.

As per an AFP report, prosecutors in the Southern District of Texas said that they were engaged in a so-called “pump and dump” scheme in which they would hype particular stocks to their followers with the intent of dumping them once prices jump.

The US Securities and Exchange Commission (SEC) as per Reuters said that it has filed civil charges against the defendants, claiming that seven of them used Discord and Twitter to boost stocks. The eights one has been charged with aiding and abetting the scheme via a podcast he ran.

Investigators said that the influencers mainly focused on penny stocks.

As per Forbes Penny stocks “are shares of publicly-listed companies that have a very low price value” that generally trade at really low prices of a dollar or less. Most of these shares were in companies with a market capitalisation of less than $100 million.

Mitchell Hennessey of Hoboken, New Jersey, Texas residents Edward Constantinescu, Perry Matlock, John Rybarczyk and Dan Knight, along with California residents Gary Deel and Tom Cooperman, Stefan Hrvatin of Miami has been named as the defendants.

Of these Matlock has pleaded not guilty.

Assistant Attorney General Kenneth Polite of the Justice Department’s Criminal Division said that “Securities fraud victimises innocent investors and undermines the integrity of our public markets.”

(With inputs from agencies)

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