A high number of pump-and-dump groups has been found in various applications
In a research carried out by Social Science Research Network and published on December 18, it was specified that thousands of pump-and-dump groups are actively working in popular messengers. It is not a new phenomenon, but Cointelegraph announced about having observed such activities in telegram groups last year. The information revealed recently show that such groups work on a wide scope and are almost efficacious.
What does pump-and-dump mean?
Pump-and-dump is an illegal exchange wherein the investor or a group of investors promotes the stock they own. Immediately after the stock price has increased, they sell it. It is somehow considered a stock fraud. Of course, this trick results in satisfying outcomes in small markets and such stocks are usually offered under the name of “hot tips” in order to intrigue customers, and it leads to creating a price bulb.
How wide is these groups’ activities?
According to an article on December 19 in Bloomberg, the researchers found 4818 pump-and-dump groups from January to July. These groups were working in Telegram and Discord messengers. The researchers say that despite the fact that these groups’ general façade is not different from the groups in other markets and those who were in the past, about 2000 cryptocurrencies in an illegal atmosphere help them to defraud easier.
It points that pumping obscure coins (or in low volumes) are much more profitable than pumping predominant coins in the market, while currencies such as Bitcoin are not safe against pump-and-dump phenomenon. 76 BTC-related pump-and-dump groups have been identified in the telegram, and so have six groups in Discord.
How is the future of cryptocurrency market manipulation?
In a report recently published in Cointelegraph, two acts related to cryptocurrency market manipulation were published under the titles of “The Virtual Currency Consumer and Protection Act of 2018” and “Virtual Currency Market and Regulatory Competitiveness Act of 2018” in November and it is planned to be announced in The United States House of Representatives.
NASDAQ, the second largest stock market, announced in November that their supervision technology can remove manipulation in cryptocurrencies market. The first cryptocurrency customer of this company which used their technology was Gemini which is an exchange market owned by Winklevoss twins. Wall Street is now working on market manipulation; however, to what extent can NASDAQ technology prevent cryptocurrencies market manipulation is the question to be answered in the future.