“This does look like a classic case of you got some insider information and acting on that information. And that’s illegal.” says Dylan Hedtler-Gaudette, a government affairs manager working at the Project on Government Oversight, “I don’t want to prejudge, but based on everything that’s out there, I think there is a very strong possibility that if someone is going to investigate this, they’re going to find something.”
Those striking remarks lodged towards Rep. Madison Cawthorn (R-NC) as he hyped up an alleged pump-and-dump cryptocurrency scam, and may have broken federal insider trading laws in the process, multiple watchdog groups said.
On Dec. 29, James Koutoulas, a hedge fund manager and the founder of the “Let’s Go Brandon” (LGB Coin) cryptocurrency, was photographed with the North Carolina congressman at a party. LGBCoin is considered a “meme coin” which was set up in the aftermath of the viral slogan playfully admonishing President Joe Biden.
Cawthorn, who stated publicly he owns LGBCoin, responded to the Instagram picture posted on Koutoulas’s page with, “LGB legends. … Tomorrow we go to the moon!”. The next day, LGBCoin fulfilled the prediction of the legislator.
All of the further details stem from a statement released with NASCAR driver Brandon Brown announcing on Dec. 30 It was intended that the meme coin would be the primary sponsor of his 2022 season. The value of LGBCoin shot up by 75% after this. Brown’s statement included remarks from Koutoulas, who was pictured with Cawthorn only a few hours earlier.
According to several watchdogs sharing similar this sentiment, Cawthorn’s Dec. 29 Instagram post appears to suggest that he had ahead-of-time knowledge of LGBCoin’s deal with Brown. According to the watchdogs, Cawthorn’s post, in addition to his statement that he owns LGBCoin, necessitates a DOJ and SEC investigation to see whether the lawmaker violated federal insider trading laws.
The market cap of all LGBCoins in circulation surpassed $570 million following Brown’s Dec. 30 announcement. By the end of January, the market capitalization of the meme coin plummeted to $0.
According to Koutoulas in a Feb. 20 livestream, two reasons contributed to the LGBCoin’s plummet: On January 4, NASCAR rejected LGBCoin’s sponsorship offer, and then later in the month, unnamed insiders with a significant stake in the coin dumped all of their holdings at once, sending the market value of the coin plummeting.
In April, one disappointed investor filed a class-action lawsuit against Koutoulas and other LGBCoin insiders, alleging that they used the digital currency to run a pump-and-dump operation.
Although Cawthorn is not named as a defendant in the class action, he is mentioned as one of the coin’s celebrity endorsers who aided Koutoulas in inflating LGBCoin’s market value and popularity before the proverbial “rug pull”.
if Cawthorn purchased LGBCoin before Dec. 30 with nonpublic knowledge of the cryptocurrency’s pending deal with Brown, that would constitute insider trading, a federal crime that can involve prison time.
Craig Holman, a government affairs lobbyist for Public Citizen, said if Cawthorn purchased LGBCoin with secret information about the cryptocurrency’s pending deal with Brown before Dec. 30, that would be insider trading, a felony under federal law that can result in jail time.
Conversely, those on Cawthorn’s side of the aisle contend that this is just another Witch-hunt to find a way to invalidate Cawthorn’s 2022 Congressional campaign.