GameStop Trader Keith Gill Faces Class-Action Lawsuit Over Social Media Posts

• Experts question the veracity of Keith Gill’s allegations of influencing GameStop’s stock using social media, which has led to fraud lawsuits against him.
• Legal expert Eric Rosen thinks the lawsuit against Keith Gill is likely to fail because the claims don’t have much substance.
• Gill’s disclosure of his GameStop holdings spurred significant price surges, but proving fraud based on social media remains complex.

A fraud lawsuit is pending against a trader Keith Gill from the 2021 GameStop short squeeze. A class-action lawsuit filed in New York on June 28 claims that he ran a “pump and dump” scheme through posts on social media starting on May 13. According to the lawsuit, Gill deceived his followers and caused them to lose money by failing to properly disclose his GameStop option trades.

Read CRYPTONEWSLAND on google news

The plaintiff, Martin Radev, represented by law firm Pomerantz, claims injury from the alleged scheme. Radev purchased 25 GameStop shares and three call options in mid-May. The lawsuit points to Gill’s return to social media on May 13 after a two-year hiatus. His cryptic memes on his X account sparked a 180% surge in GameStop shares, jumping from $17.46 to $48.75 by May 14’s close.

Significant Price Surge

Gill disclosed a sizeable position in GameStop on June 2 via Reddit, revealing ownership of 5 million GameStop shares and 120,000 call options expiring on June 21, 2024. This disclosure sent GameStop prices soaring above $45. By June 13, Gill had exercised all 120,000 options, realizing millions in gains and using these gains to acquire more GameStop shares.

The lawsuit claims that Gill did not sufficiently disclose his intent to sell his options ahead of time. This alleged non-disclosure misled followers and market participants, causing investor losses.

Lawsuit Likely to Fail

Former federal prosecutor Eric Rosen, founding partner at Dynamis LLP law firm, believes the lawsuit is “doomed to fail.” In his June 30 blog post, Rosen argues the claims against Gill lack merit. He contends that no reasonable investor would expect Gill to hold onto all his options until their exact expiry.

Rosen also notes that the plaintiff’s intent to profit from the price impact of Gill’s posts rather than their content weakens the case. Proving one’s status as a reasonable investor based on such an approach is challenging. He stresses that purchasing securities because “Roaring Kitty” posted memes on social media is unreasonable.

Rosen emphasizes that proving securities fraud requires demonstrating intentional deception or omission of crucial information. He argues that random memes from “Roaring Kitty” on social media do not constitute provable claims. Consequently, Rosen believes a well-crafted motion to dismiss could easily defeat the lawsuit.

Gill’s influence on GameStop’s stock price remains significant, but legal experts see his latest troubles as unlikely to hold up in court. The details of securities law and the difficulties in establishing fraud based on social media activity are brought to light by this case.

Read also:

• GameStop Shares Surge Over 47% as Keith Gill Announces Return to Livestreaming
• GameStop and Gorilla Rise, but BlockDAG Dominates Future Crypto Scene with Outstanding Keynote and $45.8M Presale
• BlockDAG’s Presale Rockets to $51.1M with Influencer Boost; GameStop Shares Tumble as Fetch.ai Outlook Dims
• GameStop (GME) Up 100% Pre-Market as Bitcoin (BTC), Dogecoin (DOGE), and Chainlink (LINK) Reveal Bullish Charts
• Bullish Market for Memecoins: Profit Opportunities Ahead