Ethics Panel Finds Cawthorn Improperly Promoted Cryptocurrency

WASHINGTON — Rep. Madison Cawthorn, R-N.C., may have only weeks left in Congress, but he’ll be leaving lighter in the wallet than he might have expected.

On Tuesday, after a seven-month investigation, a House Ethics panel concluded there is “substantial evidence” the North Carolina Republican promoted a cryptocurrency in which he had a financial interest in violation of House rules protecting against conflicts of interest and the House Code of Official Conduct.

However, it said the investigative subcommittee that actually carried out the inquiry into his activities could not come to a consensus on whether to reprimand or censure the departing congressman, who lost the Republican primary for his House seat last May.

Instead, it directed Cawthorn to pay $14,237.49 to “an appropriate charitable organization by Dec. 31; to pay $1,000 in late filing fees to the Treasury Department within 14 days; and file a “periodic transaction report” disclosing his Jan. 17, 2022, sale of his Let’s Go Brandon Coin.

The investigative subcommittee also closed the books on a separate allegation made against Cawthorn — that he had engaged in an improper relationship with one of his congressional staffers.

The investigators said they found no evidence of this relationship and recommended no further action with respect to that allegation.

The dual investigation of Cawthorn began in May 2022, after the witnesses informed the Ethics panel of his cryptocurrency activities.

According to the report the panel issued Tuesday, Cawthorn received 180 billion Let’s Go Brandon Coin on Dec. 21, 2021, for which he provided a $150,000 check to the witness, based on an over two-week-old valuation of LGB Coin. 

The transaction occurred just before LGB Coin announced that it would sponsor NASCAR driver Brandon Brown in the 2022 season. 

The sponsorship was made public on Dec. 30, 2021; however, NASCAR withdrew its approval on Jan. 4, 2022. 

The investigation found that Cawthorn sold nearly all of his LGB Coin in three batches on Dec. 31, 2021, Jan. 4 and 17, 2022.

“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,” the report said.

According to the Ethics panel, Cawthorn did not disclose either his purchase or sales of his LGB Coin until after the investigation of his activities had begun.

In the end, the investigative subcommittee ruled Cawthorn had received an improper gift because he was able to purchase the cryptocurrency on more generous terms than were available to the general public.

The investigators did not reach a consensus on whether the representative intended to personally profit from his promotional activities, but did find “he should have been sensitive to the appearance of impropriety that his actions might create.”

They also noted that “as a member of the House, Rep. Cawthorn has a duty to protect the integrity of that institution, and his participation in promotional efforts for the cryptocurrency he owned was inconsistent with that duty.”

As the investigators’ report noted, “Members are widely recognizable public servants, and their participation in commercial endorsements or promotions may create the perception that they are making use of their official position for commercial gain. While cryptocurrency promotion, particularly of a ‘meme coin,’ may be a novel issue before the committee, whether a member may promote an asset in which that member has a financial interest is not a novel question. The committee’s established guidance provides that members should not be actively involved in promoting or endorsing any goods or services in which the member or the member’s family has a financial interest.”

The Ethics panel said it hopes the Cawthorn matter will “serve to educate all members about the laws and rules designed to protect the integrity of the House against conflicts of interest, including as they apply to digital assets.”

As to allegations of engaging in an inappropriate relationship, the House panel said both Cawthorn and the other individual involved denied having any romantic or sexual relationship. 

Further, all witnesses interviewed by the investigative subcommittee also stated there was no improper relationship between the two, and that the close relationship between Cawthorn and the individual did not create an unfair work environment. 

“Furthermore, the [Interagency Security Committee] established that any depictions of sexually themed or otherwise inappropriate comments or conduct took place prior to Representative Cawthorn’s service in the House and beyond the ISC’s jurisdiction,” the panel report said.

Dan can be reached at [email protected] and @DanMcCue