As cryptocurrency gains more and more popularity among novice investors, there’s a lot of FOMO going around. However, the problem with cryptocurrency is that it’s a highly unregulated market, so there’s little oversight as to what projects are launching and whether they’re keeping promises.
This has led to the rise of cryptocurrency influencer scams, which is when an influencer uses their popularity to convince followers into buying a certain asset, most often cryptocurrency. One such example is that of Edward Constantin, commonly known by his Twitter handle @MrZackMorris. Here’s how the self-proclaimed finance guru scammed his followers.
Used Social Media To Gain Many Followers
At the moment, Edward Constantin is being charged by the SEC for stock manipulation after he and co-conspirators convinced followers to buy into assets. He’s the founder of Atlas Trading, along with Perry Matlock, and both of them promoted themselves as experts on picking assets and stocks.
They mainly did this through Twitter and the Atlas Trading Discord server. Here, they commonly discussed cryptocurrencies, stocks, and even NFTs, often encouraging followers to buy them.
Using social media such as Twitter, Constantin and Perry were able to garner a large following of people who followed their so-called trading advice. They mainly targeted novice investors with little experience of how to read the market.
Constantin has over 543,000 followers on Twitter alone; combine that with Perry’s Twitter following and you get almost a million followers on Twitter alone. And they weren’t alone; besides the Atlas Trading founders were six other co-conspirators who also promoted their advice.
Showcased an Extravagant Lifestyle
One of the main techniques that the eight crypto influencers used was to post pictures of them living an extravagant and luxurious lifestyle. This was all under the guise of showing followers that they could achieve such success in trading as well. Based on the SEC’s claims, the group of 8 influencers made more than $100 million in their operation to swindle novice investors over three years.
The lawsuit, which was filed mid-December 2022, includes various tweets from the influencers, which were used to emotionally entice followers. These tweets include multiple instances of the influencers being arrogant and boastful. Many of these talked about how they could afford luxury goods and automobiles.
Such posts were often accompanied by pictures of them with different supercars like Lamborghinis or McLarens. The whole point of doing so was to distract investors from the reality of the assets and crypto they were being told to invest in.
Sold Shares While Still Promoting Them
The Atlas Trading discord chat, which had over 233,000 members, was the main platform for the entire operation. The defendants in SEC’s lawsuit promoted stocks to hundreds of thousands of Twitter followers, as well as users in the Discord chats as well.
But as they hyped up these assets and told their followers to do the same, they continued to sell their shares without disclosing that they intended to dump the securities at the same time as they promoted them.
This is an example of a classic pump-and-dump scheme, in which the influencers promote a certain security to their followers, encouraging them to buy the security.
At the same time, many of the influencers posted disclaimers on their accounts, stating that their views ‘are just opinions and not financial advice.’ The aim of generating hype is to raise the price of the asset, and then sell off their holdings while the price is at its peak.
All in all, it’s clear that Edward Constantin is, in fact, an influencer who scammed countless gullible investors into purchasing securities that had no real value. Along with his co-conspirators, he rallied a huge following on social media and used images of a luxurious lifestyle to entice investors.
Later, he promoted securities and encouraged his followers to buy them, driving up their value. Once the price peaked, he sold off his stocks, effectively getting away with over $100 million.