A collection of obnoxious but nevertheless perplexingly influential morons have been charged with brazenly pumping stocks via Discord, Twitter, and podcasts and then dumping their shares without disclosing that they were doing so, generating $100 million in profits by illegally throwing their own followers—over a million altogether—under the bus and running them over, according to the Securities and Exchange Commission.
They also “bragged and laughed about making profits at the expense of their followers” in private chats and “surreptitiously recorded conversations” (whoops), according to the SEC’s complaint.
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Seven of the people charged are Perry Matlock (@PJMatlock), Edward Constantin (@MrZackMorris), Thomas Cooperman (@ohheytommy), Gary Deel (@notoriousalerts), Mitchell Hennessey (@HughHenne), Stefan Hrvatin (@LadeBackk), John Rybarcyzk (@Ultra_Calls). An eighth, Daniel Knight (@DipDeity), co-hosted the stock market podcast “Pennies: Going in Raw,” where he pushed these people as “expert traders,” “provided them with a forum for their manipulative statements,” and “regularly generated profits from the manipulation,” per the SEC.
Together, the group had about 1.5 million Twitter followers, to whom they “allegedly disseminated false and misleading information about the securities that they pumped and dumped as part of the charged scheme.” The DOJ noted in a release that the defendants positioned themselves 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.”
In fact, what they were good at (allegedly) was looking rich, pushing stocks through various channels, and then selling before their followers could. Joseph Sansone, who runs the SEC enforcement division’s market abuse unit, said in a statement that they “took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits.”
The problem, the SEC dryly notes, is that the alleged criminals (but proven imbeciles) had a tendency to discuss “their scheme over Discord voice chats that they believed were private, but were being recorded.”
This created a trail of evidence that is hilariously brazen. To take one example, Knight, the self-proclaimed “Deity of Dips” and co-host of the iHeart Radio podcast “Pennies: Going in Raw,” had a tendency to say things like, “Congrats to all the longs that banked with me on this one,” publicly on Twitter, where he has 170,000 followers.
His tone in private was, to say the least, different. “Get caught? … We’re robbing f*cking idiots of their money…” he said in one Discord voice chat, according to the SEC.
In another area of the complaint, the SEC quotes from a Discord call in which Knight conveniently breaks down why what they were doing was illegal (emphasis ours):
“In another surreptitiously recorded Discord call, on February 24, 2021, involving Knight, Cooperman, and others, Knight acknowledged that he understood the Primary Defendants were engaging in market manipulation, and explained why he posted fewer recommendations on Twitter and Atlas than the Primary Defendants: ‘[The less] I mention a stock, the less likely I get involved whenever all of Atlas gets a class action f*cking lawsuit . . . I’m playing this extremely smart, for the very long term. If you don’t think all these f*ckers go to jail or at least get sued, you are crazy. . . playing stupid does not work in court. . . it’s market manipulation. . . . I mean you look up the definition of market manipulation . . .’”
Notably, the accused told their followers that they were not giving financial advice—a common disclaimer among shills of all stripes on the internet, including in crypto. The SEC wasn’t buying it, however, and alleges that defendants understood that their advice would be acted on by their followers and that their lavish wealth-posting constituted a signal that their stock tips were, in fact, financial advice.
The complaint is chock-full of damning evidence. According to the complaint, the group regularly pushed stocks, pretending that their incentives were aligned with those of their followers in WAGMI harmony, and then sold to their gain and everyone else’s loss.
To take another example, one of the defendants, Matlock, the “CEO” and co-founder of Atlas Trading—defined by the SEC as a “free online forum that cultivated a following of novice stock traders by purporting to provide educational content about trading and securities markets”—would tweet things like: “I’ll never get sick of pumping…. money into my followers bank accounts. LETS ALL GET RICH!” and “And I’m not pumping and dumping on anyone.”
He would then, per the U.S. government, dump on everyone, like he allegedly did in the case of the company FDS Pharma, Inc.:
“Matlock, for example, having promoted FDS Pharma, Inc. (NASDAQ: HUGE) to followers, reported on Atlas on February 3, 2021: ‘HUGE I took the loss on it too. We will find a better one.’ Matlock in fact made approximately $27,734 dumping his HUGE shares the day he made that post.”
Or here:
“Matlock echoed the sentiment, posting on Atlas at 3:38 p.m.: ‘Adding CEI with you that’s cheap AF,’ using an abbreviation for the slang term cheap ‘as f*ck.’ Within the next four minutes after those posts, Matlock sold 165,100 shares…”
The case could potentially answer one of the most defining legal questions of our time: whether writing “not financial advice.. don’t buy/sell off my tweets EVER” in your Twitter bio can protect you from being found guilty of conspiracy to commit securities fraud. According to the SEC, it can’t. Parallel charges have been brought by the SEC, the Department of Justice, and the U.S. Attorney’s Office for the Southern District of Texas.
The lesson, as always, is don’t take financial advice from people who tweet things like this: