Outgoing Rep. Madison Cawthorn (R-NC) revealed Friday he sold upward of $250,000 of the Let's Go Brandon meme cryptocurrency on Dec. 31, 2021, the day it saw its market value peak. Less than a month later, the meme coin had lost 100% of its value.
Multiple watchdogs told the Washington Examiner that the filing bolsters their suspicions that Cawthorn engaged in an insider trading scheme with the meme coin, whose leaders face a class-action lawsuit for allegedly scamming retail traders by orchestrating a "pump and dump" scheme with the coin.
MADISON CAWTHORN IMPLICATED IN POTENTIAL INSIDER TRADING SCHEME, EXPERTS SAY
"It's very damning," said Craig Holman, a government affairs lobbyist with Public Citizen. "The timing is spot on for what suggests to be insider trading. He buys the stock, it increases dramatically in value, and he sells it at the peak moment. That's what appeared to be what was going on in the first place, and this really confirms it."
The Washington Examiner reported Cawthorn may have implicated himself in an insider trading scheme when he posed with LGB coin ringleader James Koutoulas at a party on Dec. 29. Cawthorn posted on Instagram that evening in response to the photo: "LGB legends. ... Tomorrow we go to the moon!"
The next day, LGB did exactly as Cawthorn predicted.
NASCAR driver Brandon Brown announced on Dec. 30 that the meme coin would be the primary sponsor of his 2022 season, causing LGB's value to spike by 75%. Koutoulas was directly involved in negotiating the deal between LGB and Brown, according to Brown's statement.
Cawthorn disclosed in his periodic transaction report filed Friday that he purchased between $100,001 to $250,000 worth of LGB on Dec. 21. Cawthorn was pictured holding an LGB coin button and posing with Koutoulas weeks earlier on Dec. 5.
Incredible spending back to back nights with the affable Patriot @CawthornforNC pic.twitter.com/mzZTXppya4— James Koutoulas (@jameskoutoulas) December 5, 2021
Cawthorn also disclosed in the filing that he sold a portion of his LGB holdings on Dec. 31 for between $100,001 and $250,000.
Cawthorn saw his investment in the coin increase by upward of a staggering 97% during the 10-day period he held the coin, according to LGB's market data.
"This looks like a pretty classic 'pump and dump' scheme," said Jordan Libowitz, a spokesman for Citizens for Responsibility and Ethics in Washington.
CAWTHORN MAKES DUBIOUS CLAIM AS HE DENIES TRADING CRYPTO WITH INSIDER KNOWLEDGE
"Did he have inside information? It sure appears that way," Libowitz told the Washington Examiner. "He's hanging out with the guy, announced it was going to spike the next day. The next day it spiked, and then he sells a portion of it. We don't know exactly how much he sold since he said it's partial, but he sells it the next day."
LGB's market value suffered a precipitous decline beginning just one day after Cawthorn offloaded upward of $250,000 of the coin onto the market. The coin's troubles compounded on Jan. 4 after NASCAR rejected the coin's sponsorship deal with Brown. By the end of January, the market cap of the meme coin dropped all the way to $0.
Koutoulas blamed the coin's implosion in part on unidentified insiders who dumped their outsize holdings of the coin all at once, he said in a Feb. 20 livestream.
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 LGB insiders of using the digital currency to orchestrate a "pump and dump" scheme.
Cawthorn isn't named as a defendant in the class-action lawsuit, but he is identified as one of the coin's celebrity endorsers that helped Koutoulas inflate the coin's market value before the rug was pulled on retail traders.
LGB relaunched in February, but it is trading 99% below its peak price set the day Cawthorn sold his holdings in the meme coin.
After LGB's crash, Cawthorn appeared at multiple events with Koutoulas and repeatedly urged his followers to buy the coin.
"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 LGB coin 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."
Amazing to see Patriots like this shouting us out!@jameskoutoulas and @CawthornforNC going strong at this weekend American Freedom Tour event in Fort Lauderdale!#letsgo #AFT #Freedom pic.twitter.com/jhtXP8nXjt— LetsGo Brandon (@LetsGo) March 22, 2022
The House Ethics Committee voted unanimously on Monday to launch an investigation into Cawthorn for his promotion of LGB. The move came weeks after Sen. Thom Tillis (R-NC) called on the ethics committee to investigate whether Cawthorn engaged in an insider trading scheme with the coin.
Both Holman and Libowitz said the ethics committee only has jurisdiction over the matter while Cawthorn remains in office.
Cawthorn is set to depart Congress in January following his primary defeat to state Sen. Chuck Edwards on May 17.
"The House Ethics Committee should proceed very quickly on this," Holman said. "It seems like all the evidence is crystal clear. But what the House Ethics Committee can do if it goes a little late is they can refer to the [Securities and Exchange Commission] and let the SEC continue pursuing insider trading charges."
"The SEC may be interested in picking this up independently," Holman added. "The SEC has grown increasingly concerned about bitcoin operations. So they may very well pick this up."
Both Cawthorn and Koutoulas rejected allegations that Cawthorn had insider knowledge when he traded LGB in December. Both issued statements saying information about the coin's deal was public knowledge when he purchased the coin.
But neither Cawthorn nor Koutoulas were able to provide any records to the Washington Examiner showing that the deal was public knowledge in early December.
The Washington Examiner has been unable to find any public mentions from Brown about the LGB sponsorship deal before its Dec. 30 announcement.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Brown made no mention of the deal in interviews with the New York Times and Sports Business Journal in late December. And Brown made no mention of LGB when he gave a shoutout to his sponsors in a lengthy Twitter thread posted on Dec. 18.
Cawthorn's office did not return a request for comment.