Tanzeel Akhtar is an independent British journalist whose work has been published in the Wall Street Journal, CNBC, FT Alphaville, Investing.com, 福布斯, Euromoney and Citywire.
“Pump and dump” schemes have been around since long before cryptocurrency was invented. What’s striking about the crypto markets is that this type of manipulation is done out in the open.
On various social media channels, for example Telegram, BitcoinTalk and Reddit, groups of individuals come together and agree to buy altcoins at a certain price and to sell simultaneously at a specific time when the price peaks. They often spread false or misleading information to persuade unsuspecting investors to buy during the run-up.
But you have to give them credit for one thing: they don’t couch their activities with euphemisms.
Just look at the names of the top five P&D chat groups on Telegram, 根据 Business Insider:
- PumpKing Community (14,317 会员)
- Crypto4Pumps (7,602 会员)
- AltTheWay (5,582 会员)
- Pump.im (148 会员)
- OCPump (1,281 会员)
While this twisted sort of transparency may be refreshing when compared to the secretive manipulation of Libor by traders at large banks a decade ago, the prevalence of these groups underscores the hazards facing investors in cryptocurrency.
“This has a negative effect on the overall market and easily creates fear, 不确定和怀疑 (AROUND) in the overall crypto community,” said Oleg Seydak, the CEO of Blackmoon Financial Group, a platform for marketplace lending of cryptocurrency.
“This type of manipulation unfortunately affects a great majority of new crypto investors and if we want the industry to prosper, we need to work together to prevent and shut down these channels and groups,” 他说.
怎么样, 虽然? One way is to encourage whistleblowing.
The Commodity Futures Trading Commission (CFTC), 美国. agency that regulates derivatives, announced in February that it would pay a bounty to those who come forward with information that leads to an enforcement action.
Another potential solution is a self-regulatory organization (SRO) like the one proposed by by Gemini founders Cameron and Tyler Winklevoss. The concept has the support of CFTC commissioner Brian Quintenz. But it’s unclear whether an SRO would have any teeth.
Until regulators come up with rules to curb P&D scams, investors need to be extra cautious they don’t get taken for a ride.
Psychology is key behind these scams. Beware as fraudsters are usually masters of persuasion and will tailor their pitches to tap into their targets’ psychological profiles.
记得, if it sounds too good to be true, it probably is.
Keep your guard up
For an illustration, below is a screenshot of a P&D group in action, courtesy again of Business Insider. Note the breathless language that tries to capitalize on FOMO (害怕错过什么): a coin’s price is “flying”; 它的 “so cheap now.”
Proceed with extra caution around tokens issued from initial coin offerings (感染控制主任), as some have estimated that perhaps one out of 10 ICOs has used this scheme at least once.
According to a January 博客文章 by Sergey Khorolskiy, when some ICO teams understand that their project is close to failure, they organize a pump and dump. The strategy is simple: Using all types of social networks, they begin to “shoot” followers with good news.
Cryptocurrencies in general are susceptible to manipulation because, like penny stocks, they are thinly traded when compared to mainstream financial assets.
“One investor can drive prices on a single exchange by taking a large position one way or the other, or simply by putting out a large bid or ask that by itself moves the market,” said Trace Schmeltz, a partner in the Chicago and Washington, D.C. offices of Barnes & Thornburg LLP.
更重要的是, “for cryptocurrencies that trade on multiple markets, a trader could potentially move the market globally by moving the price on a single exchange.”
为此原因, investors should be wary of following pricing as reflected on less well-established exchanges, Schmeltz added.
Like it or not, crypto is here to stay. As the market evolves the scammers and fraudsters will be weeded out as regulation is enforced. 直到那时, we can expect there will some tears along the way.
Pumping up a balloon 通过存在Shutterstock图片
在blockchain新闻领导者, CoinDesk是争取最高的新闻标准，并通过遵守媒体插座 严格的一套编辑政策. CoinDesk是数字货币集团的独立运营子公司, 投资于cryptocurrencies和blockchain新创.