Charming Medical's Crash: A Social Media Stock Scheme Unravels

NEW YORK, NY – December 29, 2025 – A newly public healthcare company that saw its stock price skyrocket over 700% in a matter of weeks is now at the center of a regulatory storm and a flurry of class-action lawsuits. Charming Medical Limited (NASDAQ: MCTA), a Hong Kong-based wellness firm, had its trading abruptly suspended by the U.S. Securities and Exchange Commission (SEC) in November amid an investigation into a sophisticated, alleged market manipulation scheme fueled by social media.

Investors who bought into the meteoric rise are now facing significant losses, with the stock remaining frozen as regulators demand answers. In the aftermath, at least seven law firms, including DJS Law Group and Scott+Scott Attorneys at Law LLP, have filed class-action lawsuits on behalf of shareholders, alleging the company and its executives violated federal securities laws by failing to disclose the fraudulent activity that artificially inflated its share price.

From IPO to SEC Halt: A Stock's Wild Ride

Charming Medical’s journey on the Nasdaq was as brief as it was dramatic. The company, which operates wellness centers based on Traditional Chinese Medicine (TCM), launched its Initial Public Offering (IPO) on October 21, 2025, at a modest $4.00 per share. What followed was a spectacular rally that seemed to defy market logic.

With no significant company news or fundamental shifts in its business to justify the surge, MCTA shares climbed relentlessly. By November 12, the stock had reached an all-time high of $29.36, representing a gain of more than 730% from its IPO price in just over three weeks. That same day, the rally came to a screeching halt.

The SEC issued an order temporarily suspending all trading in Charming Medical securities, effective until November 25. The commission’s reasoning pointed directly to the digital sphere, citing “potential manipulation in the securities of MCTA effectuated through recommendations made to investors by unknown persons via social media.”

According to the SEC, these actors appeared to be orchestrating a campaign to “artificially inflate the price and trading volume” of the stock. Following the SEC's move, Nasdaq also halted trading and stated it would not resume until Charming Medical “fully satisfied” its request for additional information. As of late December, the stock remains suspended, leaving investors who purchased shares during the run-up in limbo.

Charming Medical has publicly stated that it did not participate in any manipulative activities and is cooperating with the regulatory inquiries. The company also asserted that its underlying business operations and financial position, which include reported revenues of $6.22 million and net income of $1.2 million for its 2025 fiscal year, remain unchanged by the trading suspension.

The Anatomy of an Alleged Digital Scheme

The case against Charming Medical shines a harsh light on the evolving nature of market manipulation in the age of social media. The lawsuits allege the company was the subject of a fraudulent stock promotion, often called a “pump-and-dump” scheme, carried out by a network of individuals operating in the shadows of the internet.

These “unknown persons,” as the SEC described them, allegedly included individuals impersonating financial advisors. They are accused of using online forums, social media platforms, and private chat groups to disseminate misinformation and create a sense of urgency and excitement around MCTA stock. According to the allegations, these promoters encouraged retail investors to buy and hold the stock, sometimes demanding screenshots of their transactions as proof of participation. This tactic allegedly helped create a feedback loop of artificial buying pressure, driving the price higher and allowing insiders or early participants to sell their shares at inflated prices.

“The speed and anonymity of social media create a perfect storm for market manipulation,” a securities law expert not involved in the case commented. “Regulators are in a constant race to catch up with new tactics that can create a buying frenzy based on sensational and unsupported claims, leaving unsuspecting investors to foot the bill when the scheme collapses.”

The allegations suggest that insiders or their affiliates may have used offshore or nominee accounts to coordinate the dumping of shares while the stock was being aggressively promoted online.

Corporate Governance Under Scrutiny

With the stock frozen and lawsuits piling up, attention is turning to the role and responsibility of Charming Medical’s leadership. The class-action complaints argue that the company's public statements and risk disclosures were materially misleading because they failed to mention the fraudulent promotion and artificial trading activity that was the true driver of its stock performance.

One lawsuit, filed in the Southern District of New York, specifically names Charming Medical’s CEO Kit Wong, other executives, and affiliated entities as defendants. The core of the legal argument is that the company had a duty to be aware of and disclose the manipulative forces affecting its stock to provide a true and fair picture to the market.

This case raises critical questions about corporate governance in an era where a company's market value can become detached from its fundamental business. Charming Medical, founded in 2016 by Wong, operates “Beauty Lab” wellness centers in Hong Kong, offering services like womb-warming therapy and TCM-inspired massages. While the company reported a 54% increase in earnings in its last fiscal year, its modest financial footprint stands in stark contrast to the massive market capitalization it briefly achieved during the alleged stock promotion.

“Class actions are one of the few powerful tools individual investors have to challenge corporate fraud,” noted a veteran litigator observing the case. “They not only seek to recover losses but also serve as a crucial deterrent, reminding corporate officers of their legal obligation to maintain market integrity.”

The Legal Onslaught: Investors Seek Recourse

The legal battle is just beginning. Multiple law firms, including Glancy Prongay & Murray LLP, the Law Offices of Frank R. Cruz, and Portnoy Law Firm, have announced investigations or filed suits. They are seeking to represent any investor who purchased MCTA shares between the IPO on October 21 and the trading halt on November 12, 2025.

The lawsuits allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, which broadly prohibit deceptive and manipulative practices in connection with the sale of securities. The firms have set a deadline of February 17, 2026, for an investor to file a motion to be appointed as the lead plaintiff, who acts on behalf of all other class members in the litigation.

For now, the future of Charming Medical remains uncertain. The company must first satisfy the information requests from Nasdaq and the SEC before trading can even be considered for resumption. Meanwhile, the accumulating lawsuits promise a prolonged legal fight over who is responsible for the millions in shareholder value that vanished when the music stopped.