Schemes of pumps and landfills – where a good is traded to raise the price before traders download it for a profit – they are making their way to the cryptocurrency market, with digital chatrooms growing on the Internet where coin dealers will gather to track a scam.
According to a report in Wall Street Journal, the largest of a dozen documents analyzed is Big Pump Signal, a chat room with over 74,000 followers that communicated on the Telegram messaging app. After the launch at the end of December, the group spoke of 26 pumping operations that gave rise to 222 million dollars of trade, as reported by Wall Street Journal . There are other groups, which WSJ said could add tens of millions of activities. The other groups also operate in private chats that require an invitation.
The scams came on the heels of initial coin offerings in which startups were selling digital tokens to raise money for their projects. The ICOs have attracted about $ 20 billion over the past year and a half, from $ 300 million collected from 2014 to 2016.
According to WSJ, Big Pump will announce a date, a & # 39; hour and exchange for the pump – which allows traders to know to create a buying frenzy just to turn around and sell quickly. The scam can take place in a few minutes, with those who can publicly gloat about it. WSJ pointed to a July day when Big Pump Signal told followers to start buying CloakCoin, a relatively unknown cryptographic currency. The price of CloakCoin has risen on the Binance cryptocurrency exchange after the Big Pump signal. The prices of the other digital token on the exchange did not move during the day's increase in CloakCoin. It went up 50% before going down almost $ 1 two minutes later. $ 1.7 million of transactions were made in a digital token that did not trade in the previous hour.
While the document was unable to say the exact number of pump and dump schemes under way with cryptocurrencies, he claimed to have found 63 for example, actively following a pattern, with many of the groups not even hiding their goals, using names like MEGA Pump and Orion Pump. Most use the Telegram and Discord messaging apps, which together have 236,000 followers since the end of June. Many groups apply monthly rates that can be $ 50 up to $ 250 and require users to evangelize the service to get access. While the pump and dump chat room operator will get the most out of it, it's not always a win for traders – but the appeal of being involved makes them come back, the report noted.