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- Republican congressman Matthew Cawthorn has been implicated in a crypto pump and dump
- Cawthorn held and promoted LGBCoin when allegedly being in possession of insider information
- LBGCoin pumped 75% on a NASCAR sponsorship announcement, which Cawthorn allegedly knew about
Matthew Cawthorn, a Republican congressman from North Carolina, could be in legal trouble after he promoted and held the Let’s Go Brandon meme coin which pumped and dumped. Cawthorn was a public supporter of the coin, helping to build the hype around it while allegedly possessing privileged information about a sponsorship deal, and The Washington Examiner claims that Cawthorn’s actions could violate securities laws, citing “multiple watchdog groups”.
LGBCoin Pumped 75% on NASCAR Deal
The LGBCoin meme coin launched last year in the wake of the chant mocking President Joe Biden, with Cawthorn posting on Instagram on December 29 that he met with James Koutoulas, a hedge fund manager and the founder of the cryptocurrency, at a party. The comment on Koutoulas’ post said “LGB legends. … Tomorrow we go to the moon!”, which it did, jumping 75% the following day.
The reason for the pump was an announcement by NASCAR driver Brandon Brown that the coin would be the primary sponsor of his 2022 season, which The Washington Examiner’s sources claim could constitute insider trading if it can be proved that Cawthorn found out about the deal at the party. As is usual form, whales dumped their holdings near the peak of the pump.
SEC Could Investigate Pump and Dump
The watchdogs told The Washington Examiner that the post and the Cawthorn’s statement that he owned the coin “warrants an investigation from the Department of Justice and the Securities and Exchange Commission to determine whether the lawmaker violated federal insider trading laws.” One of these, Dylan Hedtler-Gaudette, the government affairs manager for Project on Government Oversight, a federal watchdog group, confirmed what Cawthorn could have done wrong:
This looks really, really bad. This does look like a classic case of you got some insider information and acting on that information. And that’s illegal.
A class action lawsuit has already been filed regarding the pump and dump, although Cawthorn isn’t named as a defendant. He is however identified as one of the coin’s celebrity endorsers that helped Koutoulas inflate LGBCoin’s market value before the rug was pulled.
Koutoulas has since relaunched LGBCoin, with the revamp trading at 95% below the peak price set in late December.