Known on Twitter as Zack Morris and PJ Matlock, the founders of Atlas Trading and several alleged co-conspirators have been accused of stock manipulation by the U.S. Securities and Exchange Commission.
The SEC alleges the group earned about $100 million in roughly three years of engaging in a fraudulent scheme to scam investors. Atlas Trading founders Edward Constantin, or @MrZackMorris on Twitter, and Perry Matlock, @PJ_Matlock on Twitter, are said to have conspired with several other individuals in pursuit of artificially boosting share prices of small-cap stocks.
In the complaint, filed late Tuesday with the U.S. District Court Southern District of Texas, the SEC alleges the group “promoted themselves as stock-picking gurus” to their “legions of followers” on Twitter and Discord. Crypto and NFT trades were also often discussed and promoted inside Atlas Trading’s Discord server, which has 236,000 members.
Although the complaint zeroes in on allegations of promoting small-cap stocks, the SEC’s claims of individuals using social media to shill faulty or risky investments come at a time when both the news and social media are afire with talk of the disastrous collapse of crypto exchange FTX. The company’s founder, Sam Bankman-Fried, like many other leaders in the crypto space, has often used Twitter to discuss investing in digital currencies.
On Monday, authorities in the Bahamas arrested Bankman-Fried. The SEC charged him with fraud on Tuesday.
The SEC’s Atlas Trading complaint alleges Constantin and Matlock — with the help of Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, John Rybarcyzk and podcast host Daniel Knight — “engaged in a long-running” scheme to defraud people online.
The defendants are alleged to have enlisted a phased approach of selecting stocks “ripe for manipulation” that they would then acquire at a low price. Then, using their reach on Twitter and Discord, the group told people to buy and hold the shares. Finally, the defendants would sell their shares “into the demand generated by their recommendations,” the complaint said.
Outlining its case, the SEC details specific instances where the defendants allegedly advised people to buy or hold shares while they were simultaneously selling the same shares.
When promoting Camber Energy Inc., which trades on the New York Stock Exchange, the SEC noted Constantin's tweet: “Too many of you act like little bitches when there’s dips. It’s all part of the game." Camber Energy currently trades at less than $1 per share.
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
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