Citron Research founder faces fraud charges, could face 25 years in prison

Author: Brayden Lindrea, CoinTelegraph; Compiler: Deng Tong, Golden Finance

Andrew Left, founder of the short-selling financial research firm Citron Research, has been charged with securities fraud for allegedly misleading retail investors through "bait and switch" stock recommendations and making $16 million in profits.

The U.S. Securities and Exchange Commission alleged in a July 26 statement that Left, a staunch cryptocurrency skeptic, used social media and television appearances to recommend stocks in which he held short or long positions.

This created the false impression that his public comments about these stocks were consistent with his company's trading activities - even though in many cases he would do the opposite.

“Lft bought back shares immediately after telling readers to sell, and sold shares immediately after telling readers to buy.”

The regulator added: “This fraud deceived investors and enabled Left to use his Citron Research reports and tweets as a catalyst for short-term profits.”

The SEC alleges that Citron and Left engaged in illegal trading and attempted market manipulation between March 2018 and December 2023, and filed a complaint in the U.S. District Court for the Central District of California.

A total of 26 trades were made against 23 companies, including Nvidia, American Airlines, Alibaba, Meta (formerly Facebook), and X (formerly Twitter, which is now privately traded).

Meanwhile, the U.S. Department of Justice also announced a criminal complaint against Left, accusing the short seller of securities fraud and lying to federal law enforcement about compensation from the hedge fund.

If Left is found guilty on all 18 fraud-related charges, he could face up to 25 years in prison. More than two years before he was indicted, he said the crypto industry was rife with fraud.

When asked where fraud was occurring in financial markets in July 2022, Left said: “I think crypto is just flat-out fraud, over and over again.”

Citron Recently Advised Investors to Short Coinbase

In February, Left’s Citron called for shorting Coinbase stock after the cryptocurrency exchange was temporarily disrupted on Feb. 28.

Citron recommended that investors go long on Bitcoin through a spot exchange-traded fund while shorting “bloated” cryptocurrency exchanges.

Source: Citron Research