Eight Twitter finance gurus indicted in criminal pump-and-dump scheme

The US Department of Justice indicted eight online financial influencers with criminal securities fraud for executing 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 had bought in bulk, making misleading statements about the value of the shares and their intent to hold them. Once the price was raised by followers, the group allegedly secretly sold the shares to maximize their profits. The Securities and Exchange Commission (SEC) filed a parallel civil lawsuit. Both complaints accuse seven of the men directly of securities fraud, while an eighth member is accused of aiding the conspiracy through a finance podcast. The conspiracy allegedly ran from January 2020 to at least April 2022, covering an explosion of interest in stock trading during the pandemic.

“I’m playing this extremely smart”

The conspirators include Edward Constantinescu (who called himself Zack Morris on Twitter and currently has 500,000 followers), Perry “PJ” Matlock, John Rybarczyk (who called himself “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 published a podcast called Cents: entering raw which was co-hosted by one of the alleged scammers and, according to the SEC, promoted the others as expert traders.

The defendants’ fraud charges carry a maximum sentence of 25 years each, and Constantinescu faces an additional 10 years on the charge of engaging in illegal currency transactions.

The case is a still relatively rare example of legal consequences in the risk-taking, personality-driven, positivity-obsessed world of financial influencers, who combine unofficial trading advice with conspicuous displays of success; in the case of the eight defendants here, “Tweeted images of luxury residential properties, vehicles, jewelry, and other luxury items.” And the Justice Department indictment cites a series of brazen text messages and voice conversations recorded between the alleged participants in the scheme.

At one point, Knight mocks an anonymous co-conspirator who worries about getting caught and says he wants to shop “the right way”: “The right fucking way? We’re stealing fucking idiots’ money.” , Knight boasts.(Asterisks reproduced from indictment.) In the same conversation, Cooperman describes the mechanics of how Rybarczyk pumps stocks:

Like what [RYBARCZYK] what it does is it alerts him, and then like five minutes later all his little minions start retweeting him and saying ‘i added with him’, so, like, it builds hype again. It happens every time. They got this shit down to the damn science. It’s great.

However, in another recording, Knight worries that other members of the right may be receiving also shameless. “I’m playing this extremely smart, very long term. If you don’t believe all these motherfuckers are going to jail or at least get sued, you’re crazy,” the indictment quote reads. “Just wait and see… It’s market manipulation.” (The mention of the indictment of anonymous co-conspirators and recorded conversations implies that, as is not uncommon in financial schemes, someone was ratting out in the metaphorical group chat.)

Twitter shows that Atlas Trading members were identified as stock pumpers long before the indictment. A account called GuruLeaks, for example, posted multiple tweets warning about the group. But the responses include advocates: “who cares… I’ve been since February,” read a May 2022 tweet.

Stocks manipulated included China SXT Pharmaceuticals, Torchlight Energy Resources, GTT Communications, Surface Oncology, Alzamend Neuro, Universe Pharmaceuticals, ABVC BioPharma, DatChat, and Brickell Biotech. The Department of Justice urges people who believe they may have been scammed to contact the address or number listed on their press release.

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