Cryptocoin Pump and Dump – Old School Approach in a Brave New World.
“What has been will be again, what has been done will be done again; there is nothing new under the sun.” – King Solomon
It’s amazing in one sense that cryptocoin pump and dump even exists in the modern age. Cryptocurrency is new but the pump and dump is far from an innovation; the scheme has been deployed for a century or more to artificially increase the value of an otherwise worthless asset then sell it to unsuspecting suckers to make a fast killing. While illegal in the United States when it comes to regulated securities, it’s thriving in cryptocurrency circles.
Cryptocoin pump and dump works just like its ancestor; the stock pump and dump scheme. A group of people pick out a worthless shit stock (shitcoin today) and artificially pump its value up through fake news, a stimulated social media stampede scheme and other forms of propaganda leading the public at large to buy into this “hot coin” by leveraging FOMO. There’s where the pump starts.
The scumbags behind the cryptocoin pump and dump coordinate to drive the price up through their own purchases of the coin in question all well coordinated in a Telegram chat or other means of simultaneous communication. Once enough suckers get wind of this “hot tip” the coin price skyrockets. It “moons” and all of the unsuspecting investors are dreaming of their shiny new Lambo.
That’s when the cryptocoin pump and dump goes into dump mode; all of the scumbags dump the coin making insane profits while leaving innocent people broke and confused. Well who wouldn’t be broke and confused after pouring a ton of their money into a cryptocurrency that suddenly tanks -in a matter of minutes – with no rhyme or reason.
The problem has gotten big enough to prompt the CFTC to release their first Pump and-Dump Virtual Currency Customer Protection Advisory statement just a few days ago.
Key points of the CFTC bulletin include:
“Customers should know that these frauds have evolved and are prevalent online. Even experienced investors can become targets of professional fraudsters who are experts at deploying seemingly credible information in an attempt to deceive.”
The advisory even quoted messages from an online chatroom coordinating a pump and dump…
“15 mins left before the pump! Get ready to buy.” “Five minutes till pump, next message will be the coin! Tweet about us and send everyone the link to telegram (sic) for outsiders to see what we are pumping so they can get in on the action too!! lets (sic) take it to the MOON!!!!!”
All told the entire pump and dump scheme above was over and done in less than ten minutes.
The CFTC warns digital currency investors in no uncertain terms:
“Customers should avoid purchasing virtual currency or tokens based on tips shared over social media. The organizers of the scheme will commonly spread rumors and urge immediate buying. Victims will commonly react to the currency’s or token’s rising prices, and not verify the rumors. Then the dump begins. The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes.”
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While cryptocoin pump and dump schemes are immoral they are not illegal at this time because cryptocurrency exchanges are not regulated.
You Don’t Need to be a Cryptocoin Pump and Dump Victim.
Here are some key cryptocoin investing tips:
- Don’t purchase digital coins or tokens because of a single tip, especially if it comes over social media.
- Don’t believe ads or websites that promise quick wealth by investing in certain digital coins or tokens.
- Don’t participate in pump-and-dump trades; market manipulation is against the law and many participants end up losing money.
- There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, RUN!
