Madison Cawthorn (R-NC), was accused this week of engaging in a cryptocurrency pump and dump scheme involving the Lets Go Brandon (LETSGO) coin.
LETSGO is a meme coin created by James Koutoulas, which was named after a chant conservatives use to mock President Joe Biden.
Several federal regulatory authorities accused Cawthorn of possibly engaging in insider trading and conspiracy regarding the crypto coin. While the coin still exists as of April 2022, it is trading at a fraction of its value from the end of 2021.
For example, on December 29, 2021, Cawthorn wrote on Instagram, “LGB legends….Tomorrow we go to the moon!”
On December 40, NASCAR driver Brandon Brown stated that the Lets Go Brandon crypto coin would be his major sponsor in 2022. This announcement caused great controversy and the coin increased by 75% and eventually hit a market value of $570 million.
But the sponsor arrangement for the driver was rejected by NASCAR in early 2022. Insiders who purchased large numbers of the coin sold all of them.
LETSGO Coin Value Plunged To Zero
When the sponsorship was rejected, the coin’s value plunged quickly to zero, leaving many investors holding the bag. Koutoulas and other insiders backing the coin have been accused of manipulating the coin price to do a pump and dump scam. This has been alleged in a class-action lawsuit by a displeased investor.
The congressman has not been listed as a defendant in the class-action lawsuit. But he was viewed as one of the backers of the coin. It is believed he tried to inflate the coin price before the dumping happened.
Cawthorn allegedly had advanced knowledge of the coin’s contract with the NASCAR driver that wasn’t available to the public. This would possibly explain his posts and passions for the project.
It has been proposed that the DOJ and SEC review Cawthorn’s actions to determine if he broke insider trading laws.
One federal watchdog government affairs official said Cawthorn’s actions look “really, really bad.” He added that this appears to be a classic situation where someone in Congress received insider information and acted on it for a financial benefit. That is against the law.
More Information About Pump And Dump Schemes
Given how investor insiders who owned large numbers of the Lets Go Brandon coin dumped their shares very quickly, many believe Cawthorn may have been involved in a pump and dump scheme.
Pump and dump schemes involve criminal activity where the fraudsters spread untrue or misleading information that causes a buying frenzy to boost the stock price. Then, the shares are quickly sold at a higher price, according to the SEC.
The SEC notes that pump and dump schemes sometimes involved people with political power who may have insider information, as Cawthorn may have. These scams often are seen on the Internet where you can sess urgent messages telling investors to buy a stock right away.
The marketers may say they have insider information about a potentially positive development for the stock. After the scammers dump shares and stop the hype, the price usually drops like a stone, and investors can lose millions.
Other Legislators Calling For Federal Investigation Into Cawthorn
Several prominent people, including North Carolina Senator Thom Tillis, are calling for an investigation into Cawthorn’s possible involvement in a crypto pump and dump scheme.
Tillis told the media last week that insider trading by someone in Congress is a serious matter that betrays their oath of office. He added that Cawthron needs to provide the people of North Carolina with an explanation of his behavior.
Last month, Tillis endorsed the congressman’s primary challenger. Also, a Tillis-backed PAC spent at least $300,000 this year on political ads that attack the Republican Cawthorn.
A public affairs lobbyist for Public Citizen – Craig Holman – told Newsweek recently that if the congressman’s public comments are the truth, then you may have broken federal insider trading laws.
Holman said the biggest issue is whether the congressman bought or sold LGB coins. He noted that the legislator has not reported any coin transactions through the STOCK Act. This congressional law requires legislators to report purchases of securities within 45 days.
Also, Public Citizen reported that Americans usually want our government representatives to act more ethically than the average person. Sometimes even the appearance of illegal financial activity can be almost as bad as really committing the crime.
However, it’s possible that some of the congressman’s public statements could be fictional. Whether Cawthorn really bought coins and sold them is what the SEC will be working to find out.
Cawthorn has been a vocal public advocate for investors to purchase the LGBCoin. One of the promotions was an Instagram video where he said that he owns some of the coin.
The congressman has been a source of other negative headlines recently. For example, he was stopped in an airport for the second time for carrying a firearm. He also has faced criticism for allegedly making comments about attending parties with other legislators who he says were participating in orgies and illegal drug use.
In response to the pump and dump allegations, Cawthorn posted on Instagram on Tuesday, where he attacked “RINO senators and establishment politicians who want to take the country backward ‘to the days before Donald Trump was president.’