The warning signal has been raised for social media influencers who are engaged in the promotion of cryptocurrencies and subsequent manipulation of their prices, as former Securities and Exchange Commission (SEC) official John Reed has announced that their days are numbered. He asserts that these influencers will soon find themselves subjected to the same anti-fraud rules that govern the manipulation of exchange-listed securities.
A recent surge in the number of influencers and self-proclaimed analysts aggressively promoting cryptocurrencies via their platforms has been observed. Reed cautions that the SEC will take swift action against such individuals. As he states, “What amazes me most about crypto promoters in particular is the brazen and arrogant way so many of them grift their victims — always in plain view.”
While the crypto industry currently exists in a regulatory gray area in the United States and worldwide, the loopholes that enable influencers to evade scrutiny when engaging in fraudulent activities or price manipulation will likely close soon.
In support of this assertion, Reed cited the case of Ricky Bobby, where the SEC leveled partially settled charges against Francis Sabo (a.k.a. “Ricky Bobby”) for his involvement in a $100 million securities fraud scheme. Sabo and several other defendants were previously charged by the SEC in December 2022 for using social media platforms to manipulate exchange-traded stocks. It was established that Sabo portrayed himself as a reliable stock-picking expert with a substantial following on the Atlas Trading forum on Discord, a platform that purportedly offers educational content about trading and securities markets.
The indictment against Sabo and his associates was based on public statements published on Twitter and records from private conversations involving the accused individuals. This case should serve as a stark warning to crypto influencers who are only promoting cryptocurrencies for exit liquidity.
While the content presented here may reflect the author’s views, it is vital for investors to conduct their market research before engaging in any cryptocurrency investments. Neither the author nor the publication hold any responsibility for financial losses incurred by individuals who heed the advice of unscrupulous promoters. It seems that as the crypto industry continues to evolve, so too will the regulations that govern it. Consequently, influencers who flout the rules or engage in fraudulent behavior will find it increasingly difficult to escape the watchful eyes of regulatory bodies such as the SEC.