The US Department of Justice has charged eight online finance influencers with criminal securities fraud for running a $114 million pump-and-dump scheme on their collective 1.5 million Twitter followers.
According to an indictment, members of a Discord-based forum called Atlas Trading used that platform and Twitter to promote stocks they’d purchased in large quantities, making misleading statements about the stocks’ value and their intent to hold it. Once followers had driven up the price, the group allegedly secretly sold off the stock to maximize their profits. The Securities and Exchange Commission (SEC) filed a parallel civil complaint. Both complaints charge seven of the men directly with securities fraud, while an eighth member is charged with aiding the conspiracy through a finance podcast. The conspiracy allegedly ran between January 2020 through at least April 2022, covering an explosion of interest in securities trading during the pandemic.
“I’m playing this extremely smart”
The conspirators include Edward Constantinescu (who went by Zack Morris on Twitter and currently has 500,000 followers), Perry “PJ” Matlock, John Rybarczyk (who went by “The Stock Sniper,” with 267,000 followers), Gary Deel (“Mystick Mac,” with 143,000 followers), Stefan Hrvatin (“Lade Backk,” with 150,000 followers), Tom Cooperman (“Tommy Coops,” with 129,000 followers), Mitchell Hennessey (“Hugh Henne,” with 237,000 followers), and Daniel Knight (“Dan, Deity of Dips,” with 170,000 followers). Knight ran a podcast called Pennies: Going In Raw that was co-hosted by one of the alleged fraudsters and, according to the SEC, promoted the others as expert traders.
The defendants’ fraud charges carry a maximum penalty of 25 years each, and Constantinescu faces an additional 10 years from a charge of engaging in unlawful monetary transactions.
The case is a still relatively rare example of legal fallout in the risky, personality-driven, and positivity-obsessed world of finance influencers, who pair unofficial trading advice with conspicuous displays of success — in the case of the eight defendants here, “pictures on Twitter of luxury residential properties, vehicles, jewelry, and other luxury items.” And the Justice Department’s indictment quotes a series of brazen text and recorded voice conversations between the alleged scheme participants.
At one point, Knight mocks an unnamed co-conspirator who frets about getting caught and says he wants to make buys “the right way”: “The f*cking right way? We’re robbing f*cking idiots of their money,” boasts Knight. (Asterisks reproduced from the indictment.) In the same conversation, Cooperman describes the mechanics of how Rybarczyk pumps stocks:
Like, what [RYBARCZYK] does is he alerts it, and then, like, five minutes later all his little minions start, like, retweeting it, and saying ‘added with him,’ so it, like, builds the hype back up. It happens every single time. They have this sh*t down to a f*cking science. It’s great.
In another recording, though, Knight worries some other members of the right might be getting too brazen. “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,” the indictment quote reads. “Just wait and see ... It’s market manipulation.” (The indictment’s mention of unnamed co-conspirators and recorded conversations implies that, as is not uncommon in finance schemes, somebody was snitching on the metaphorical group chat.)
Twitter shows that Atlas Trading members were identified as stock pumpers well before the indictment. An account called GuruLeaks, for instance, posted multiple tweets warning about the group. But the replies include defenders — “who cares ... I’ve been in since Feb,” reads one tweet from May 2022.
The manipulated stocks included China SXT Pharmaceuticals, Torchlight Energy Resources, GTT Communications, Surface Oncology, Alzamend Neuro, Universe Pharmaceuticals, ABVC BioPharma, DatChat, and Brickell Biotech. The Justice Department urges people who believe they were victimized by the scam to contact the address or number listed in its press release.