ASHEVILLE, N.C. — Rep. Madison Cawthorn broke congressional ethics rules by improperly promoting a cryptocurrency in which he had a financial interest, according to a report made public on Dec. 6.
The House Ethics Committee, following a seven-month investigation, found the Western North Carolina congressman "improperly promoted a cryptocurrency in which he had a financial interest, in violation of conflicts of interest rules."
"The (Investigative Subcommittee) found 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 pursuant to House disclosure requirements," the 81-page report said, adding, however, it did not find that violation to be "knowing or willful."
Finally, the committee said he received an improper gift "when he purchased LGB Coin on terms more favorable than those available to the general public."
The committee fined Cawthorn more than $15,000, directing $14,237.49 to be paid 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 improper relationship with a staffer.
The Citizen Times, part of the USA TODAY Network, has reached out to Cawthorn's office.
Some had said there were more potentially serious violations of using non-public information when buying the coin and manipulating the market, both potential crimes. It was not immediately clear if any criminal investigation was underway or would happen, something typically investigated by the federal Securities and Exchange Commission and the Justice Department.
The ISC said it interviewed seven witnesses, including Cawthorn, and reviewed documents received from four individuals. The allegations had been the subject of public reporting, as well as a class action lawsuit filed in federal court relating to an alleged “pump and dump” scheme.
Cawthorn on Dec. 21, 2021 had received 180 billion of LGB Coin, paying $150,000. The transaction occurred just before LGB Coin announced that it would sponsor NASCAR driver Brandon Brown in the 2022 season, the subcommittee said. The sponsorship was made public on December 30, 2021, but NASCAR withdrew its approval on January 4, 2022.
Cawthorn sold nearly all of his LGB Coin in three batches on December 31, 2021, January 4, 2022, and January 17, 2022.
But Cawthorn did not disclose either his purchase or sales of his LGB Coin until after the ethics committee established the ISC, the report said.
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"Additionally, Representative Cawthorn was seen in multiple photographs and videos in which he appeared to support or specifically encouraged individuals to purchase LGB Coin, including after the value of the LGB Coin that he held plummeted."
In February 2022, the coin was re-launched with the new “LETSGO” coin deposited into the cryptocurrency wallets of existing LGB Coin holders. But neither the original LGB Coin or the rebranded LETSGO coin recovered any significant value, the report said.
In April 2022, a class action complaint was filed in federal district court against some involved and NASCAR alleging a pump and dump scheme. Cawthorn was not named as a defendant in the suit, which is ongoing, but the plaintiffs cited Instagram posts in which he appeared and said the defendants “used [Representative] Cawthorn to promote the LGBCoin at [an event] and investors following the event through social media.”
Cawthorn will leave Congress after one term following years of scandals and missteps. He lost in the May party primary to Sen. Chuck Edwards who beat Democrat Jasmine Beach-Ferrara in the general election.
Follow Joel Burgess on Twitter: @AVLreporter.
This article originally appeared on Asheville Citizen Times: Rep. Madison Cawthorn fined for improperly promoting cryptocurrency