The Securities and Exchange Commission (SEC) of the United States filed a claim against eight people associated with Atlas Trading, a Discord-based forum. The co-founders of the forum, as well as affiliated podcasters and YouTubers, are accused of stock manipulation.
According to the filing, the eight defendants were accused of deceiving their millions of social media followers that they are experts in identifying stocks. Whereas, they were identified as stock manipulators.
They plot their dubious scheme by finding companies that are susceptible to manipulation, buying sizeable holdings in them, and then promoting them as sound investments to their followers on Twitter and other social media platforms.
Additionally, they persuade their followers to invest in the chosen stocks by frequently posting online that they have already done so or plan to do so in order to hold the stocks themselves. Instead, the defendants cash in on the demand that their false advertising creates by selling their shares.
The defendants were reported to have earned $100 million from January 2020 through the present. It was also revealed that the defendants got support from Daniel Knight, who co-hosted a well-known stock trading podcast with Hennessey.
The Responsibilities of SEC
The SEC is a government agency that regulates the securities industry in the United States. The SEC’s mission is to protect investors, maintain fair and orderly markets, and promote capital formation.
While the crypto industry is still experiencing shock over the collapse of exchanges, The U.S. SEC has requested businesses that have any exposure to crypto assets, including those working with businesses that are involved in the crypto industry to publicly disclose such information.
The SEC is mandating companies that have been exposed to bankruptcy, large withdrawals of crypto assets, and had crypto assets not properly accounted for to properly reveal the aforementioned to guide users before making investments.
In related news, Sam Bankman-Fried, the former CEO of FTX, has been summoned to a hearing on February 2 to answer allegations made by a Texas regulator that the company sold unregistered securities products through its yield-bearing service.
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