Twitter Influencers Duped Retail Investors Using Penny Stocks

By Claire Ballentine and Paulina Cachero

The meme stock and crypto craziness that bubbled up online in recent years is facing a reckoning.

The U.S. Securities and Exchange Commission headquarters in Washington, D.C., U.S., on Wednesday, Feb. 23, 2022. Hedge funds and other investors would have less time to disclose that they’ve acquired a significant stake in a company under new rules proposed by the SEC.

Atlas Trading — known for giving advice to small-time traders trying to make a quick buck — is the latest to come under investigation, with its founders charged by federal authorities with running a $100 million “pump and dump” scheme through social media and taking advantage of novice traders by “feeding them a steady diet of misinformation,” according to a press release from the SEC.

Authorities allege that Edward Constantinescu, or @MrZackMorris on Twitter, Perry Matlock, @PJ_Matlock and six others were involved in buying stocks, pitching them to their online followers and then selling the shares to make a profit.

What is Atlas Trading?

The stock trading chatroom on the Discord platform rose in popularity during the pandemic as retail traders piled into investing for the first time, generating a following of more than 230,000. Constantinescu and Matlock also became well-known Twitter personalities who posted their investment ideas on their feeds. They have 550,000 followers and 340,000 followers, respectively, and the group as a whole collectively had more than 1.5 million followers, according to the indictment. Thousands would tune into live discussions on Twitter spaces to hear trading advice from members of Atlas Group, and Morris would encourage followers to join to “make more money.” Newbie crypto traders were especially enamored by Constantinescu — an immigrant from Romania — because he billed himself as an average guy, working at T-Mobile before making his rags to riches dreams come true in the stock market.

Alongside tweets about his stock picks, Constantinescu documented pictures of his lavish lifestyle, relaxing by the pool at his 10,000-square foot Texas lakefront mansion and posing in front of his brand new Rolls Royce. When asked about his credentials, Constantinescu would tell people to look at his “gains.” 

In a Twitter Spaces last year, Constantinescu attributed his success in retail trading to AMC Entertainment Holdings Inc., a stock that he frequently hyped up. He also referred to himself as the “Wolf of FinTwit” on Instagram and posted photos of a new Tesla that he bought with his earnings. 

What stocks did they promote?

There were many, but GTT Communications Inc., Surface Oncology Inc. and Universe Pharmaceuticals Inc. were listed in the indictment. Atlas allegedly told followers to take positions in the stocks, with the share prices surging before an inevitable plummet. For instance, Surface Oncology rose about 400% from March 2020 to January 2021, before dropping in subsequent months. The group also promoted Context Logic Inc., Carlotz Inc. and Enveric Biosciences Inc.

Sofia Samrad, a New York-based retail trader, bought those three securities in August 2021 on Constantinescu’s recommendation. She decided to trust him after seeing one of his stock picks FuboTV Inc. jump from $8 to $60. Instead of turning a profit as Atlas promised, Samrad lost nearly $100,000.

“As soon as I put my money in, it would drop like crazy — sometimes by 20%,” she said.

Samrad eventually realized something was amiss when she talked with a friend who had lost as much as $80,000 on Atlas Trading’s stock picks. She then sold all the positions she’d taken at their recommendation and filed a complaint to the SEC in May 2022. 

Who is Involved?

Along with Constantinescu and Matlock, the others charged are: Thomas Cooperman (@ohheytommy); Gary Deel (@notoriousalerts); Mitchell Hennessey (@Hugh_Henne); Stefan Hrvatin (@LadeBackk); John Rybarcyzk (@Ultra_Calls) and Daniel Knight (@DipDeity).

All but Knight were charged with securities fraud, while Knight was charged with aiding and abetting the alleged scheme. He co-hosted a podcast in which he promoted the others as expert traders, and also traded alongside them and generated profits from the manipulation, according to the SEC.

The SEC noted that members “bragged and laughed about making profits at the expense of their followers.” The indictment included an excerpt from a Discord voice recording in which Knight allegedly said they were “robbing f*cking idiots of their money.”

What happens now? 

The SEC’s investigation is still ongoing, handled by the agency’s market abuse unit in the Boston regional office. At the same time, criminal charges against all eight individuals have also been filed by the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

The defendants made their initial court appearances on Tuesday, according to the US Department of Justice. Each faces a maximum penalty of 25 years in prison if convicted. Those who believe they are victims of the fraud can contact the agency toll-free at (888) 549-3945 or by email at [email protected]

More stories like this are available on bloomberg.com

What people are saying

9 thoughts on “Twitter Influencers Duped Retail Investors Using Penny Stocks

  1. Bogdanyqy says:

    Добрый день женщины а также правители! [url=https://tgrampodvc.ru/]Накрутка подписчиков Телеграм[/url]

    [url=https://tgrampodvc.ru/]смм накрутка подписчиков Телеграм[/url]
    [url=https://tgrampodvc.ru/]накрутка подписчиков в Телеграм живые люди бесплатно[/url]

    Фансервис накрутки подписчиков, просмотров, численности соучастников голосования – самое большее надежная, функциональная и финансово выгодная специальная площадка. Накрутка в Телеграм-канал небольшой через приборов портала реализуется предельно эфирно, так как будущие функции и функции шестым чувством понятны в использовании. Намотка в Телеграме – этто наиболее результативный равным образом обоснованный эхометод привлечения новых подписчиков в течение Telegram-канал. Экстренно эпохально утилизовать подобным прибором юным площадкам, так как достаточно через силу отмахать порог в течение первоначальных 100-300 участников. Энергосистема разведки мессенджера обтяпана таким ролью, что результаты с списком каналов предлагаются в течение подневольности через числа в течение них людей.
    От целой дави Вам целых благ!

  2. EdwardBycle says:

    Товарищи! Ищете лучший сайт с целью игры? Вашему вниманию [url=https://1xslots-baq.xyz/]1xslots казино[/url] — ресурс, где каждый отыщет интересное по душе.

    Возможности:
    ? Обширный выбор игр.
    ? Эксклюзивные бонусы для новых пользователей а также постоянных игроков.
    ? Надежность и удобство по высшему разряду.

    Легко перейдите по ссылке и начните игру сразу же!

    Почему терять драгоценные минуты? Начните свою развлечение прямо сейчас а также получите удовольствие увлекательными моментами!

  3. EdwardBycle says:

    Товарищи! Ищете оптимальный сайт для игры? Вашему вниманию [url=https://1xslots-baq.xyz/]1xslots скачать на андроид[/url] — ресурс, в которой каждый отыщет что-то по душе.

    Возможности:
    ? Широкий ассортимент развлечений.
    ? Особенные бонусы для новичков а также опытных пользователей.
    ? Безопасность и комфорт по высшему разряду.

    Просто перейдите по ссылке и начните игру моментально!

    Почему тратить драгоценные минуты? Запустите свою развлечение сегодня же а также получите удовольствие уникальным игровым процессом!

  4. Simply desire to say your article is as astonishing.
    The clearness in your post is just nice and i could assume you’re an expert on this subject.
    Fine with your permission allow me to grab your RSS feed to keep
    updated with forthcoming post. Thanks a million and please carry
    on the enjoyable work.

  5. 1xslotsBycle says:

    Друзья! Ищете оптимальный ресурс для развлечений? Представляем вам [url=https://1xslots-baq.xyz/]1xslots отзывы[/url] — ресурс, в которой любой найдет что-то по душе.

    Преимущества:
    ? Обширный ассортимент развлечений.
    ? Эксклюзивные бонусы для новых пользователей и опытных пользователей.
    ? Безопасность и удобство по высшему разряду.

    Просто зайдите по ссылке чтобы начать игру сразу же!

    Почему терять время? Запустите свою игру прямо сейчас и насладитесь увлекательными моментами!

  6. 1xslotsBycle says:

    Добро пожаловать, геймеры!
    Ищете надежный сервис где можно играть без ограничений?

    Оцените [url=https://1xslotsbase.com/]1xslots casino[/url] — продвинутое игровое пространство, которое подарит незабываемые эмоции каждому игроку!

    **Что вас ждет:**
    ? Сотни лицензированных игр на любой вкус.
    ? Акции и подарки для новичков и вернувшихся игроков.
    ? Быстрые депозиты и вывод средств без лишней волокиты.
    ? Поддержка 24/7 и высокая надежность.

    Не ждите чуда — действуйте!
    Кликайте по ссылке и начинайте выигрывать уже с первых минут.

    Выбирайте 1xslots — это путь к захватывающим играм!

  7. Slot dunyas?na hos geldiniz!

    Bugun gates of olympus demo ile sans?n?z? denemeye ne dersiniz?
    Pragmatic Play’in en populer oyunu burada sizleri bekliyor!

    ?? gates of olympus 1000 demo — 1000x’e kadar oduller ile dolu!
    ?? gates of olympus oyna demo baglant?s?yla hemen oynamaya baslay?n, hediyeler sizinle olsun!

    ? En iyi zamanlar: gates of olympus kazanma saatleri icin ipuclar? da sitemizde!

    ?? Hilesiz, guvenli ve eglenceli bir deneyim ar?yorsan?z gates of olympus hilesi hakk?nda detaylara goz atmay? unutmay?n.

    ?? [url=https://gkda2024.org]
    gates of olympus 1000
    [/url]

  8. Odds says:

    Wonderful beat ! I would like to apprentice while you amend your site, how can i subscribe
    for a blog site? The account helped me a acceptable deal.
    I have been a little bit acquainted of this your broadcast offered brilliant transparent idea

  9. Tommyhox says:

    Регистрируйся, забери 3 бесплатных сертификата
    и выиграй 1 000 000 рублей
    [url=https://ubkaier.one/?s=7www1HKd1d]Подробнее…[/url]

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top