The once-rising star of the GOP Representative Madison Cawthorn is proven to violate the federal STOCK Act that requires lawmakers to report their investments within 45 days after making them.
The news came days after the House Ethics Committee had announced an investigation on the Congressman for his possible involvement in a pump-and-dump cryptocurrency project called “Let’s Go Brandon(LGB).”
Failed to Disclose Meme Coin Purchase
As the first member of the US Congress born in the 1990s, the 26-year-old Republican Representative who just lost his bid in his party’s primary election now faces another controversy – and it is about cryptocurrency. Madison Cawthorn is proven to fail to report his stake in the meme coin named “Let’s Go Brandon” – a violation of the 2012 Stop Trading on Congressional Knowledge Act, or STOCK Act.
According to the financial disclosures released on Friday, the young Congressman purchased up to $250,000 worth of LGB on December 21. On the 27th and 31st of the same month, he also purchased up to $265,000 worth of Ethereum.
Though it’s not illegal for lawmakers to trade cryptocurrencies, they must report their purchases within 45 days after making them, according to the Act. In Cawthorn’s case, he reported his investments almost 5 months later than what was required.
With the rising interest in virtual currencies, the House Committee on Ethics published a memorandum to Representatives and staffers in 2018, outlining that financial disclosure filings must include ownership details of “purchases, sales or exchanges of cryptocurrencies” worth more than $1,000.
Cawthorn is expected to face a minimum fine of $200, but he may receive a waive from the House Committee on Ethics. He reportedly joined 60 other lawmakers who failed to “disclose any stock trade made by themselves, a spouse, or a dependent child.”
A Possible Pump and Dump Scheme
It’s worth noting that the anti-Joe Biden meme coin LGB peaked at a market cap of roughly $570 million by the end of last year, but the coin soon plummeted to nearly zero within a month. Though the project was re-launched after the collapse, it soon fell back to almost nothing again.
On December 30, NASCAR driver Brandon Brown revealed that the crypto project would be the primary sponsor of his 2022 season. The news created a massive buzz, and the project soared in value. However, the potential deal with Brown was proven to be canceled in January. Meanwhile, unidentified insiders who had purchased a substantial amount of the coins in circulation quickly dumped all of them, causing numerous investors huge losses.
Days before the catastrophe occurred, Cawthorn had posted on his Instagram, chanting for the cryptocurrency “going to the moon.” It was seen by regulators that the Congressman probably had advanced non-public knowledge of the deal with Brown and benefited from such a trade.
On May 23rd, the House Ethics Committee published a release noting that it had begun to investigate Cawthorn’s improper promotion of a cryptocurrency “he may have had an undisclosed financial interest.”
Featured image courtesy of ABC News