Madison Cawthorn, a rising star in the GOP, is found to have violated the federal STOCK Act which requires lawmakers to report any investments made within 45 days.
This news was announced days after the House Ethics Committee announced that it would investigate the congressman’s possible involvement in a pump and dump cryptocurrency project called “Let’s Go Brandon(LGB).
Failure to disclose Meme Coin Purchase
The 26-year old Republican Representative from the US, born in the 1990s, is now facing another controversy. It’s about cryptocurrency. Madison Cawthorn was found to have failed to report his stake on the meme coin “Let’s Go Brandon”. This is a violation to the 2012 Stop Trading on Congressional Knowledge Act (or STOCK Act).
According to financial disclosures, the young congressman bought up to $250,000 worth LGB on Friday. He also bought up to $265,000 of Ethereum on the 27th and 31st that same month.
Although it is legal for legislators to trade cryptocurrency, they must report any purchases within 45 days of making them. According to the Act. Cawthorn reported his investments nearly five months after the deadline.
The House Committee on Ethics issued a memorandum in 2018 to staffers and representatives, highlighting that financial disclosure filings must include information about ownership of “purchases or sales of cryptocurrencies” exceeding $1,000.
Cawthorn will likely face a minimum $200 fine, but the House Committee on Ethics may waive that amount. According to reports, he was among 60 lawmakers who failed “to disclose any stock trades made by themselves, their spouse, or dependent children.”
Possible Pump and Dump Scheme
It is worth noting, however, that LGB, the anti-Joe Biden me coin, peaked at $570 million market cap by the end last year. However the coin quickly plummeted to almost zero in less than a month. Although the project was relaunched following the collapse, it quickly fell to nearly nothing again.
The crypto project was announced by NASCAR driver Brandon Brown on December 30. The project’s value soared after the news was announced. The potential deal with Brown was canceled in January. Unidentified insiders had bought large amounts of coins that were in circulation and quickly dumped them all, causing many investors enormous losses.
Cawthorn posted an Instagram post days before the disaster. He chanted for cryptocurrency “going to moon”. It was seen by regulators as evidence that Cawthorn probably knew of Brown’s deal and had benefited from it.
The House Ethics Committee released a statement on May 23rd noting that it was investigating Cawthorn for improperly promoting a cryptocurrency and “he may have been involved in an undisclosed financial gain.”
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