The House Committee on Ethics has penalized outgoing US Representative Madison Cawthorn more than $15,000 for his advocacy of a cryptocurrency in which he had an unreported investment.
Since 2021, David Madison Cawthorn has been the congressman for North Carolina’s 11th congressional district. In January 2023, he will have served his full term in the US House of Representatives. He was beaten by Senator Chuck Edwards (Republican) in recent mid-term polls.
Cawthorn “improperly promoted a cryptocurrency in which he had a financial interest,” according to a report issued by the Committee on December 6 following a seven-month probe.
Following an unreported purchase of $150,000 worth of the token by the Representative in December 2021, Cawthorn made “direct and unambiguous” promotional remarks on social media.
After Cawthorn was successful in securing the purchase of about 180 billion LETSGO tokens on terms that were better than those available to the general public, he promoted the Ethereum-based token Let’s Go Brandon (LETSGO). The token is named after a slogan and meme that is used as a substitute for the phrase “F*ck Joe Biden.”
180 billion LETSGO, with a market valuation of about $164,200 on average at the time, were received by the unknown person Cawthorn paid $150,000 to in exchange for the token. He still owns LETSGO worth $25.50 or 15.3 billion LETSGO, as per the report.
The Committee deemed the $14,237 discrepancy between Cawthorn’s payment and the tokens’ average worth at the time he got them to be a “gift,” and they advised Cawthorn to pay it back “to an appropriate charity.” He is asked to pay a $1,000 late fee for dilatory reporting of the purchase and $14,000 to the charity.
It’s interesting to note that after purchasing the tokens on December 21, 2021, Cawthorn sold “nearly all” of them in three batches, realising a loss of nearly $7,500 by the end of January 2022.
However, the Committee was unable to determine whether Cawthorn meant to benefit financially from his promotional efforts, and there was insufficient proof that he timed his transactions using non-public material.
According to the report, Cawthorn also neglected to send timely reports to the House outlining his token-related transactions. the Committee came to a conclusion that Cawthorn’s failure to disclose was not intentional or purposeful because he was ‘misinformed’ about the obligations since crypto disclosures are a relatively new requirement.
In November, Texas financial authorities began an investigation into the marketing of the insolvent company FTX by National Football League (NFL) quarterback Tom Brady and National Basketball Association (NBA) point guard Stephen Curry. Brady apparently put his entire net worth into the defunct cryptocurrency exchange.
Kim Kardashian, star of the reality TV series Keeping up with the Kardashians, was also asked to pay a sizable fine by the US Securities and Exchange Commission for accepting $250,000 to promote EthereumMax without disclosing it to the authorities.
Kim violated the federal securities laws’ anti-touting provision, the SEC ruled. She committed to paying $1.26 million in fines to resolve her legal issues and SEC charges.The $1.26 million is a collective amount that includes the $250,000 she received for promoting EMAX tokens, prejudgment interest, and a $1 million penalty. It seems, though, that Kim might prevail in the legal action brought against her.