EXCLUSIVE — Rep. Madison Cawthorn may have violated federal insider trading laws as he hyped up an alleged pump-and-dump cryptocurrency scheme, multiple watchdog groups told the Washington Examiner.

On Dec. 29, the beleaguered North Carolina congressman posed at a party with James Koutoulas, a hedge fund manager and the ringleader of the Let's Go Brandon cryptocurrency, a meme coin set up in the wake of the chant mocking President Joe Biden.


"LGB legends. ... Tomorrow we go to the moon!" Cawthorn, who has stated publicly he owns the cryptocurrency, posted on Instagram in response to the picture posted on Koutoulas's Instagram page.

The next day, LGBCoin did exactly as the lawmaker predicted.

NASCAR driver Brandon Brown announced on Dec. 30 that the meme coin would be the primary sponsor of his 2022 season, causing LGBCoin's value to spike by 75%. Brown's statement featured comments from Koutoulas, who was pictured with Cawthorn just a few hours prior.

Multiple watchdog groups told the Washington Examiner that Cawthorn's Dec. 29 Instagram post suggests the lawmaker may have had advanced nonpublic knowledge of LGBCoin's deal with Brown. The watchdogs said the post, combined with Cawthorn's statement that he owns LGBCoin, warrants an investigation from the Department of Justice and the Securities and Exchange Commission to determine whether the lawmaker violated federal insider trading laws.

"This looks really, really bad," said Dylan Hedtler-Gaudette, the government affairs manager for Project on Government Oversight, a federal watchdog group. "This does look like a classic case of you got some insider information and acting on that information. And that's illegal."

"I think there's probably a strong case here," Hedtler-Gaudette added. "I don't want to prejudge, but based on everything that's out there, I think there is a very strong possibility that if someone is going to investigate this, they're going to find something."

Craig Holman, a government affairs lobbyist for Public Citizen, said if Cawthorn purchased LGBCoin before Dec. 30 with nonpublic knowledge of the cryptocurrency's pending deal with Brown, that would constitute insider trading, a federal crime that can involve prison time.

Immediately following Brown's Dec. 30 announcement, the value of all LGBCoin in circulation eclipsed $570 million. By the end of January, the market cap of the meme coin dropped to $0.

Koutoulas said in a Feb. 20 livestream that two factors led to LGBCoin's precipitous decline: First, NASCAR rejected LGBCoin's sponsorship deal with Brown on Jan. 4, and then later that month, unidentified insiders that owned an outsize share of the coin dumped all their holdings at once, causing the coin's market value to evaporate.

The swift rise and fall of the meme coin led one jilted investor to file a class-action lawsuit in April accusing Koutoulas and other LGBCoin insiders of using the digital currency to orchestrate a pump-and-dump scheme.

While Cawthorn isn't named as a defendant in the class-action lawsuit, he is identified as one of the coin's celebrity endorsers that helped Koutoulas inflate LGBCoin's market value before the rug was pulled.

Koutoulas relaunched LGBCoin in February, claiming the second iteration of the meme coin came with restrictions preventing "whales," or people with significant holdings in the coin, from offloading all their coins at once.

Since its relaunch in February, LGBCoin has traded around 95% below the peak price set in late December.

Despite the poor performance of the meme coin, Cawthorn has continued to tour the nation with Koutoulas, promote his ownership of the coin, and urge his followers to purchase the asset.

"I got Let's Go Brandon coin," Cawthorn said at the Conservative Political Action Conference, according to a video Koutoulas posted to his Instagram page in late February. "It's working out well, very well."

Cawthorn promoted the coin again with Koutoulas in March during the American Freedom Tour in Fort Lauderdale, Florida.

"This is going to the moon, baby! To the moon!" Cawthorn said while pointing to an LGBCoin logo pinned to Koutoulas's suit jacket. "Letsgobrandon.com — get on the train. Get on the train. Take the power of currency away from the government."

Also in March, Cawthorn appeared with Koutolulas at Freedom Fight Night in Miami. The two were pictured inside a UFC-like arena pointing at the LGBCoin logo.

"The blood on the logo is from the guys that sold the dip," Koutoulas said on Instagram.

Cawthorn appeared at multiple events with Koutoulas before the meme coin spiked in late December.

"Incredible spending back to back nights with the affable Patriot @CawthornforNC," Koutoulas wrote in a Dec. 5 tweet with a picture of him posing with Cawthorn, who was holding a pin with the LGBCoin logo.

Koutoulas has also signaled that Cawthorn owns LGBCoin.

Both Koutoulas and the LGBCoin Twitter account retweeted a photo in early April that identified Cawthorn as a holder of the meme coin. Koutoulas also retweeted a message claiming the North Carolina lawmaker had "endorsed" the coin.

And in his Feb. 20 livestream, Koutoulas claimed that unidentified members of Congress had purchased LGBCoin.

"We've had several people who are on the America First platform, who are actually congressional candidates and/or current members of Congress that have bought with their own money, and I believe members have donated to [charities] with LGB," Koutoulas said.

Lawmakers are required to disclose if they purchase over $1,000 worth of any cryptocurrencies, but Cawthorn has not filed any disclosures indicating he owns LGBCoin.

Koutoulas said in his Feb. 20 livestream that both iterations of LGBCoin were designed so that the meme coin was not classified as security for regulatory purposes.

"It is not technically or legally possible for a decentralized meme coin that exists to promote free speech and charitable giving to be classified or treated as a security," Koutoulas told the Washington Examiner.

But Hedtler-Gaudette, the government affairs manager for POGO, said that even if LGBCoin isn't considered a security, that won't render Cawthorn immune from insider trading laws.

"No matter what, though, having advance and nonpublic information that is then used to gain advantage in a financial market (including straight up commodities) is illegal, making my call for DOJ or SEC investigation still operative in this case," Hedtler-Gaudette said.

Holman, the Public Citizen government affairs lobbyist, added that Cawthorn would need to disclose if he purchased over $1,000 of the coin — even if it isn't considered a security for regulatory purposes.

Amid his public promotion of LGBCoin, Cawthorn used his authority as a lawmaker to introduce a resolution in the House in February that would "deregulate cryptocurrencies and incentivize blockchain innovation."

While Cawthorn's proposed resolution lacked any specifics, Holman said Cawthorn could have run afoul of the STOCK Act if he introduced the measure for his own financial benefit.


"Owning cryptocurrency would be an asset subject to disclosure of a lawmaker’s annual financial disclosure form," Holman said. "It also could constitute a 'personal benefit' under the STOCK Act, making any official actions taken by Cawthorn to specifically and substantially benefit its value a violation of the STOCK Act."

Cawthorn's office did not return requests for comment.