Barry Silbert, founder of Digital Currency Group and Bitcoin Investment Trust, may be headed for trouble as the U.S. financial police are supposed to track down his tweets with respect to an easily manipulated cryptocurrency known as Ethereum Classic (ETC), two securities lawyers told Reuters.
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Silbert has been a big backer for the digital coin, which grew in value more than 90 times in 2017, before falling back within a broader selloff across the cryptocurrency markets.
The attorneys said that authorities should probe Barry’s role with Ethereum Classic, as his postings on price and attempts to divert enthusiasm for the new coin raise concerns over possible price manipulation. They pointed out to some samples of Silbert’s tweets that they claim promote ETC as a viable alternative to Ethereum.
Some critics feel Silbert is orchestrating a classic “Pump and Dump” by using his name and connections to trigger bullish sentiment about ETC. That a potential investigation over illegal act of manipulation could be looking at a “pro tip” he published in November, where he advised an investor to “close out his short position before an Ethereum Classic Summit” that was organized by DCG in Hong Kong.
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Just as mainstream investors have come to rely on Twitter feeds in place of traditional wire services, crypto traders and ICOs participants are now prone to moving on a headline glimpsed on social media. The alleged manipulation efforts were not limited to social media, as news reports claimed earlier that CoinDesk’s coverage has changed since Silbert’s DCG acquired the cryptocurrency news site.
Commenting on the allegations, Silbert told Reuters last month that he was “highly, highly sensitive” to the rules that govern financial markets and that he and his company are subject to anti-fraud provisions and insider trading and … all those types of things.”
Silbert stated that he would never make a recommendation or give price predictions. He added: “DCG, its subsidiaries and employees take pride in our strict compliance policies and adherence to all applicable regulations, including company-wide rules and restrictions concerning the trading of digital assets.”