Keith Gill, a stock trader known for the 2021 GameStop short-
squeeze, is facing securities fraud claims in a class-action lawsuit
over a recent spate of social media posts that saw the price of
GameStop stocks whipsaw violently between May and June.
However, a former federal prosecutor believes the lawsuit is likely
“doomed” to fail.
Fil
District of New York, the complaint accuses Gill of orchestrating a
“pump and dump” scheme for personal gain with a series of
cryptic social media posts beginning May 13.
Gill faces securities fraud allegations in a proposed class-action complaint. Source: CourtListener
The complaint alleges that Gill committed securities fraud by
failing to adequately disclose the purchase and sales of his
GameStop options calls, which allegedly misled his followers and resulted in losses for some investors.
Represented by law firm Pomerantz, plaintiff Martin Radev said he was injured by the alleged “pump and dump” after he purchased
25 shares of GameStop and three call options beginning in midMay.
Gill emerged from a two-year social media hiatus on May 13,
posting a series of cryptic memes to his X account, sparking a
180% surge in the price of GameStop shares, which rocketed from
$17.46 to $48.75 by the close of trading on May 14. Source: Roaring Kitty
In a June 2 post to Reddit, Gill disclosed a sizeable position in
GameStop, including five million shares of GameStop stock and
120,000 call options with an expiry date of June 21.
This sent the price of GameStop surging once again, closing above $45 on the day.
By June 13, Gill shared that he had exercised all 120,000 options
calls, realizing millions of dollars in gains. Notably, he had used
these gains to accumulate further GameStop shares.
The price of GameStop shares whipsawed following Gillʼs return to social media. Source: TradingView
The lawsuit claims that Gill did not sufficiently disclose his intent
to sell his options calls ahead of time, which misled his followers
and other market participants and resulted in losses for investors.
Complaint is likely “doomed, ” says
lawyer
In a June 30 blog post, former federal prosecutor Eric Rosen —
the founding partner at Dynamis law firm said the class-action
complaint is “doomed from its inception” and could be easily
dismissed if Gill files a “well-crafted” motion to dismiss.
Rosen said the lawsuits main claim that Gill should have
disclosed his intent to sell his options would not hold up well in
court, as no “reasonable person, let alone a reasonable investor, ”
would expect Gill to hold onto all of his calls until the exact time
and date of their expiry.
Related: GameStop's Roaring Kitty posts first livestream
years— price reacts
Rosen added it was “clear” the plaintiff was seeking to profit
simply from the price impact of Gillʼs posts on X, not from the
actual content contained in his X posts. As a result, it would be
hard to prove oneʼs status as a “reasonable investor” in court
based on this approach.
simply because an individual named
Roaring Kitty posted innocuous tweets on
social media. ”
Rosen said the most important part of pursuing a fraud case is
proving that a fraudster has outright lied or intentionally misled
investors by failing to disclose important information.
He explained that this class action complaint would be hard to get
past a judge, as a series of random memes posted by someone
called “Roaring Kitty” on social media are not claims containing
information that can be inherently proven to be true or false.
Magazine — Polkadotʼs Indy 500 driver Conor Daly: ‘My dad
holds DOT, how mad is that?ʼ “It is unreasonable to purchase securities
Regulation
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could reshape debt
markets and cut
borrowing costs
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Unsubstantiated Tether investigation report
shakes crypto market
COINTELEGRAPH IN YOUR SOCIAL FEED
Former President Donald Trump is currently the favorite, with 62%
odds that he will win the U.S. election, with a total of $24.7 million
in bets for and against him.
Incumbent President Joe Biden is second with $23.9 million in
bets on whether he will secure another term. Those odds,
however, have fallen from 34% to 21% since his lackluster
performance in the first presidential debate on June 28.
Meanwhile, odds for Democrats Gavin Newsom, Kamala Harris
and Michelle Obama spiked as some political commentators
questioned whether Biden should drop out of the presidential
race.
Polymarketʼs presidential election market. Source: Polymarket
Other betting markets related to the elections have also garnered
millions in bets. Bidenʼs recent debate performance has also led to a spike in “Yes” bets on “Biden drops out of presidential race” and “Biden drops out by July 4” markets, which are now at 43% and 9%,
respectively. Over $10 million in bets have been placed in those
markets.
Millions of dollars have also been bet on whether American rapper
Kanye West and crypto skeptic Elizabeth Warren could win the
presidency, but those markets show a less than 1% chance at this
Polymarket, which runs on Ethereum sidechain Polygon, saw
$109.9 million in trading volume in June its first time crossing
the $100 million mark, according to a Dune Analytics dashboard.
Trading volumes between January and May hovered between
$38.9 million and $63 million, which marked a 620% increase
from the previous five months of August to December 2023.
Polymarketʼs change in monthly trading volume since September
2020: Source: Dune Analytics
The number of monthly active traders also skyrocketed 115% to 29,266 in June.
Related: Bitcoin spikes as betting markets favor Trump during debate with Biden
The total value locked in Polymarket is now $40.2 million, up nearly 69% over the last 30 days, Token Terminal data shows.
Cryptocurrency prices and the UEFA European Football
Championship 2024 markets have also tallied large trading
volumes on Polymarket.
Buterin and venture capital firm Founders Fund. Yuga Cohler, an engineering lead at cryptocurrency exchange
C
through misleading narrativ
s
d view t
unvarnished truth. “Prediction markets are freedom preserving technology that move societies forward, ” Cohler said in a June 30 X post. Magazine:
why that matters
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