Crypto-skeptic Andrew Left of Citron Research charged with fraud

Activist short-seller Andrew Left of Citron Research, who regularly accused firms of securities fraud, has been charged with engaging in securities fraud. This indictment comes a little over two years after Left stated, “crypto is just complete fraud.”

Alongside this indictment, the US Securities and Exchange Commission (SEC) has also filed a complaint that echoes similar allegations and charges him with violating federal securities laws.

The US Justice Department (DoJ) alleges he made at least $16 million and the SEC alleges he made approximately $20 million in ‘illegal trading profits.’

The alleged scheme involved Left issuing reports or tweets that encouraged his followers to either purchase or sell certain securities. He would also include a ‘price target’ that he expected the security to reach.

When the prices started moving in response to the communications from Left, he would allegedly start unwinding his positions. This type of scheme is sometimes colloquially referred to as a ‘pump-and-dump.’

The SEC complaint notes that “if he had short exposure in a stock and planned to release a negative report, he entered an order to buy back the stock if the stock price decreased by a certain amount.”

Apparently, Left would even discuss his ability to move markets with his colleagues, stating things like, “what can I put in a tweet to juice it,” referring to the price of Invitae.

The SEC complaint further alleges that this scheme was explicitly targeted at retail investors, with Left allegedly stating that earning money from them was like taking “candy from a baby.”

According to the SEC, Left also received over $1 million from a hedge fund in exchange for publishing certain things.

The complaint also reveals that despite posting ‘investor letters,’ Citron Capital “never had any outside investors, and Left simply used Citron Capital to trade his own money.”

The SEC is seeking a director and officer ban against Left that would prevent him from serving in those capacities for a public issuer. It further wants to bar him from acting as an investment adviser.

The DoJ indictment contains one count of engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statement. A department press release notes, “If convicted, he faces a maximum penalty of 25 years in prison on the securities fraud scheme count, 20 years in prison on each securities fraud count, and five years in prison on the false statements count.”

Protos has reached out to Citron Research for comment, but at press, have had no response.

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