The SEC filed a lawsuit in the U.S. District Court for the Central District of California against crypto trader Andrew Left and his company Citron Capital for organizing and participating in a multi-year fraudulent scheme that could bring the suspect about $20 million.
The regulator accused Lefta of deliberately deceiving subscribers by publishing false and misleading recommendations on trading NFT on the site of the gaming retailer GameStop.
The SEC complaint alleges that Left used Citron Research's official website and related social media platforms at least 26 times to publicly recommend his subscribers to take long or short positions in digital assets, and then traded against them.
"Andrew Left used the trust of inexperienced investors for selfish purposes to persuade them to trade on false market signals, and then quickly change the direction of trading on the GameStop platform and profit from price movements. We have uncovered these alleged substitution tactics, which have brought Left and his firm about $20 million in illegal profits," said Kate Zoladz, director of the SEC's Los Angeles regional office.
The SEC spokeswoman added that Left boasted to colleagues that some statements were particularly effective at encouraging retail investors to trade based on his recommendations, and it was like taking candy away from a child.
As part of a parallel lawsuit, the Anti-Fraud Division of the Department of Justice and the U.S. Attorney's Office for the Central District of California announced the initiation of their own investigation into the allegations against Andrew Left.
Earlier, the American gaming retailer GameStop warned users that it was ending support for non-interchangeable tokens on its NFT platform due to regulatory uncertainty.