Scammers Earn $825 Million Manipulating Cryptocurrency Rate
The schemes of cryptocurrency rate manipulation brought scammers $825 million over the past six months, according to a study conducted by The Wall Street Journal. Drawing on the report, fluctuations in the prices for cryptos this year are connected to the traders’ speculations.
Organized trading groups use the "pump and dump" scheme, in which the value of assets is increased artificially through false recommendations. Scammers sell the position to as many investors as possible, and a cryptocurrency's price falls suddenly. Thus, traders earn hundreds of millions of dollars, but buyers suffer damages.
Scammers promote schemes in social networks and messengers, mainly in Telegram. Here channels and private conversations are created, access to which can be obtained only at the invitation of the moderator. Big Pump Signal, one of the largest such groups, has attracted 74,000 subscribers since its launch in December 2017. Here, traders conducted 26 speculations with a total trading volume of $222 million. Users, affected by Big Pump Signal manipulation, could not get support and contact the anonymous moderator.
The Wall Street Journal found 175 cases of fraudulent schemes in social networks, which were speculating on more than 120 different cryptos, in the period from January to July 2018. According to the newspaper, there are much more fraudulent offers in reality.
Ben Yates, a crypto lawyer at RPC (London), states that manipulations in the digital assets market are unpunished, as there is a lack of control on the exchanges.
The "pump and dump" strategy is no longer an innovation. The scheme allows to increase the value of unprofitable assets and sell them fast, making the profit by raising the price. Despite the illegitimate scheme, it is very popular in the crypto sphere.