Already reeling from his GOP primary loss, and after facing several other ethics complaints, Rep. Madison Cawthorn, R-N.C., is once again being accused of violating federal insider trading laws by allegedly trading the cryptocurrency LGBcoin.
The coin on the Ethereum blockchain is named after an incident in October 2021, when as NASCAR driver Brandon Brown was being interviewed following his win at Talladega Superspeedway by an NBC Sports reporter, the crowd was chanting an expletive about President Joe Biden that the reporter interpreted as “Let’s go Brandon,” television station FOX 13 in Tampa Bay, Florida, reported at the time.
The video of the incident went viral on social media and has become a meme for the anti-Biden crowd, including the introduction of a cryptocurrency coin, “LGBcoin” that was launched in November 2021 by hedge fund manager James Koutoulas.
The House Ethics Committee is currently investigating to see if Cawthorn, who owns some of the currency, and promoted it in a Dec. 29, 2021, post on Twitter, knew ahead of time that the driver in the race, Brown, would be announcing the next day that the coin would be one of his sponsors, causing the coin to spike in value, the Washington Examiner reported in April.
"This looks really, really bad," Dylan Hedtler-Gaudette, the government affairs manager for Project on Government Oversight, a federal watchdog group told the Examiner. "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. 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."
The total value of all the coins in circulation went up to $570 million after Brown’s announcement, but the market capitalization quickly dropped to $0 by the end of January, causing one investor to file a class-action lawsuit claiming fraud on behalf of Koutoulas, according to the report.
While not directly named in the lawsuit, Cawthorn was one of the coin’s biggest “celebrity” endorsers.
“Insider trading by a member of Congress is a serious betrayal of their oath, and Congressman Cawthorn owes North Carolinians an explanation,” fellow Rep. Thom Tillis, R-N.C., said in a post on Twitter when the allegation first surfaced in April. There needs to be a thorough and bipartisan inquiry into the matter by the House Ethics Committee.”
While the committee is beginning this investigation, it closed another Monday regarding a driver with a revoked license and speeding charge against Cawthorn in North Carolina earlier this year.
The committee reported that it voted to not take any action in that matter.
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