Stark’s Warning on Twitter
Former SEC chief John Reed Stark warned crypto influencers about potential prosecution if they are found to be manipulating the prices of certain tokens on social media. He criticized influencers for promoting scam projects and helping to manipulate market prices during bull runs.
Anti-Fraud Rules Apply to All Securities
Regardless of the security being manipulated — whether it’s exchange-listed, penny stock, or crypto — Stark emphasized that the same anti-fraud rules apply. He called out the blatant and audacious manner in which many influencers deceive their followers, often on platforms like Twitter, Discord, Instagram, or Reddit.
Stark’s Comments on Social Media Fraud
Social media platforms, rather than concealing fraudulent activity, may actually make it easier to detect. Stark explained that regulators simply need to log on to their computers to find an extensive trail of incriminating evidence.
Francis Sabo: A Case Study
Francis Sabo, a notorious crypto influencer, was cited as an example by Stark. Sabo was charged in a $100 million securities fraud case where he used social media platforms to manipulate exchange-traded stocks.
Notable Instances of SEC Actions
Kim Kardashian, a prominent influencer, was fined $1.26 million for promoting a fraudulent project. Bitboy Crypto, another well-known crypto influencer, was named in a $1 billion lawsuit for promoting unregistered securities. In November 2022, the SEC also issued multiple subpoenas to influencers promoting the tokens Hex (HEX), Pulsechain (PLS), and PulseX (PLSX).
Conclusion: A Necessary Intervention
The SEC’s crackdown on influencers involved in crypto price manipulation is a necessary intervention to maintain the integrity of the cryptocurrency market. As the influence of social media continues to grow in this space, the words and actions of high-profile figures can significantly sway market sentiment, with potentially serious consequences.
Influencers, as much as anyone else, must be held accountable for their actions. Stark’s warning serves as a potent reminder that social media fame offers no protection from the law. As the crypto market continues to mature and regulatory scrutiny intensifies, influencers must tread carefully and responsibly, or face potentially severe penalties for any transgressions.