ASHEVILLE, NC — Rep. Madison Cawthorn violated congressional ethics rules by improperly promoting a cryptocurrency in which he had a financial interest, according to a report released Dec. 6.
The House Ethics Committee, following a seven-month investigation, found that the Western North Carolina congressman “improperly promoted a cryptocurrency in which he had an interest financial institution, in violation of the rules on conflicts of interest”.
“The (investigating subcommittee) found that the Henderson County Republican also violated the Ethics in Government Act by failing to timely disclose his financial investment in (Let’s Go Brandon) Coin in accordance with House disclosure requirements,” the 81-page report said, adding, however, it did not find that the breach was “knowing or willful.”
Finally, the committee said he received an inappropriate gift “when he purchased LGB Coin on more favorable terms than those offered to the general public.”
The committee fined Cawthorn more than $15,000, ordering the payment of $14,237.49 to charity and $1,000 in late filing fees to the Treasury Department.
The report cleared Cawthorn of other alleged violations, including that he had an inappropriate relationship with a staff member.
The Citizen Times, part of the USA TODAY Network, contacted Cawthorn’s office.
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Some had said there were potentially more serious violations of using non-public information when buying the coin and manipulating the market, both potential crimes. It was not immediately clear whether a criminal investigation was underway or would occur, which is usually investigated by the federal Securities and Exchange Commission and the Department of Justice.
The ISC said it interviewed seven witnesses, including Cawthorn, and reviewed documents received from four people. The allegations had been the subject of public reports, as well as a class action lawsuit filed in federal court over an alleged “pump and dump” scheme.
Cawthorn on December 21, 2021 had received 180 billion LGB Coin, paying $150,000. The transaction took place just before LGB Coin announced that it would sponsor NASCAR driver Brandon Brown for the 2022 season, the subcommittee said. The sponsorship was made public on December 30, 2021, but NASCAR withdrew its endorsement on January 4, 2022.
Cawthorn sold almost all of its LGB coin in three batches on December 31, 2021, January 4, 2022, and January 17, 2022.
But Cawthorn did not disclose his purchase or sales of his LGB coin before the ethics committee created the ISC, according to the report.
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“Additionally, Representative Cawthorn was seen in multiple photographs and videos in which he appeared to specifically support or encourage individuals to purchase LGB coins, including after the value of the LGB coin he held dropped.”
In February 2022, the coin was relaunched with the new “LETSGO” coin deposited into the cryptocurrency wallets of existing LGB coin holders. But neither the original LGB coin nor the rebranded LETSGO coin recovered significant value, according to the report.
In April 2022, a class action lawsuit was filed in federal district court against certain individuals involved and NASCAR alleging a pump and dump program. Cawthorn was not named as a defendant in the lawsuit, which is ongoing, but plaintiffs cited Instagram posts in which he appeared and said the defendants “used [Representative] Cawthorn to promote LGBCoin to [an event] and investors who follow the event via social networks.
Cawthorn will leave Congress after one term after years of scandals and missteps. He lost in the May party primary to Senator Chuck Edwards who defeated Democrat Jasmine Beach-Ferrara in the general election.
Follow Joel Burgess on Twitter: @AVLreporter.
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