Republican Congressman Hit With Ethics Penalty for Crypto Pump and Dump

Blockworks
Blockworks December 7, 2022
Updated 2022/12/07 at 11:58 AM
3 Min Read
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Republican representative Madison Cawthorn of North Carolina has been directed to pay more than $14,000 for his involvement in a crypto pump-and-dump scheme earlier this year.

The House Ethics Committee approved a Dec. 1 report by its investigative subcommittee (ISC) on Tuesday, which found Cawthorn had violated House rules by having a financial interest in a supposed crypto token known as LGB Coin without first disclosing it.

According to the report, Cawthorn bought 180 billion LGB coins for $150,000 on Dec. 21, 2021 before offloading them on three occasions over an 18-day period. Cawthorn was seen promoting the token online and in person multiple times, including after its price had tanked 80% in April.

Cawthorn will now pay $14,237 to an “appropriate charitable organization” by Dec. 31, 2022 and must pay $1,000 in late filing fees to the US Department of the Treasury by Dec. 20.

“Representative Cawthorn did not disclose either his purchase or sales of his LGB coin until after the Committee established the ISC,” members of the subcommittee said in their report.

The ISC failed to reach a consensus on whether Cawthorn intended to personally profit from his promotional activities. The total sum of the fine likely stems from the ISC being unable to find whether Cawthorn knowingly or willfully engaged in the scheme.

LGB coin touted itself as an ERC-20 meme token “inspiring positivity and patriotism.” The token represented the Let’s Go Brandon movement which was a stand-in, among right-wing circles, and a reference to US President Joe Biden. Its true meaning was “F— Joe Biden.”

A class action lawsuit naming several promoters of the LGB token project, including hedge fund manager James Koutoulas, is currently working its way through the courts.

Cawthorn had also been investigated over his alleged “improper relationship” with a congressional staffer, though the ISC said in its report it had found no evidence to support that claim.

The 26-year-old, who became one of Congress’ youngest members, lost the party primary contest in May in the Republican-held rural 11th district of North Carolina by a tight margin of around 1,500 votes.

Considered a political firebrand by many critics and proponents, Cawthorn was once tipped as a rising figure within the far-right faction of the Republican party, riding on the back of Trumpism when he was elected in 2020.

The young politician fell out of favor with his colleagues when he insinuated that some Republican members of Congress had invited him to a cocaine-fueled orgy.


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