Key Takeaways
- The SEC has temporarily suspended stock trading for Smart Digital Group and QMMM Holdings.
- Both companies recently announced plans to start investing in crypto.
- The regulator flagged suspicious social media posts that may have manipulated the market.
On Friday, Sept. 26, the U.S. Securities and Exchange Commission (SEC) temporarily suspended stock trading for two Nasdaq-listed companies that have recently announced plans to invest in crypto.
The regulator highlighted “potential manipulation” of the market by social media posts that “appear to be designed to artificially inflate the price” of Smart Digital Group and QMMM Holdings.
SEC Suspends Trading for QMMM and SDG Stock
In identical announcements on Friday, the SEC said it would suspend trading of QMMM and SDG stock until Oct. 10.
Both companies have recently announced crypto treasury strategies.
On Sept. 9, QMMM revealed plans to invest as much as $100 million in Bitcoin, Ethereum, and Solana (SOL). Meanwhile, on Sept. 26, SDG said it would establish a “diversified cryptocurrency asset pool,” but didn’t specify which assets, or how much it would invest.
The initial announcements weren’t especially noteworthy. Crypto treasury strategies are all the rage in America and beyond, with dozens of public companies now committing at least a portion of their capital reserves to digital assets.
What happened next, however, triggered alarm bells at the SEC.
From the inauguration of its treasury strategy up to the market close on Friday, QMMM stock rose 959%.
Moving in the opposite direction, SDG’s share price plummeted around 87% on the day of its announcement.
Social Media Signals Suggest Price Manipulation
While the SEC didn’t identify specific social media accounts, there is evidence of a coordinated effort to influence the price of QMMM and SDG that is reminiscent of memecoin pump-and-dump schemes.
Between Sept. 26 and Sept. 29, a surge in suspicious social media activity tagging $QMMM and $SDM suggests a coordinated influence campaign, with dozens of separate posts promoting the two stocks sharing the same tactics and nearly identical language.
During this period, financial influencers like @StockPicksNYC and @teambullish95 also pushed QMMM and SDM.
Borrowing From the Memecoin Playbook
The alleged manipulation of public stocks seems to borrow from the crypto scam playbook, deploying bot networks, Telegram groups, and potentially paid endorsements to make hairbrained stock picks look like legitimate investment advice.
Like countless memecoin campaigns, the basic ideais to flood social networks with buy calls, build hype around a distinct narrative (in this case crypto treasuries), and hijack legitimate resources like official press releases to fuel the pump.
Stock markets are traditionally more insulated from this kind of activity, mainly because they are policed by regulators like the SEC. But as the cases of QMMM and SDG demonstrate, the same tactics that inflate meme token prices can also be used on public stocks.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
