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There are thousands of pump-and-dump groups on popular messaging apps, a study conducted by the Social Science Research Network (SSRN) revealed on December 18.
Pump-and-dump is the fraudulent practice of perpetrators who encourage unwitting investors to buy a good to artificially inflate the price, and then sell it when the price becomes high enough.
This practice is not new, Cointelegraph reported last year about the Telegram groups that organize pump-and-dump. The data just published, however, "suggest this [the pump-and-dump] the phenomenon is widespread and often quite profitable ".
According to an article in the study, published by Bloomberg on December 19, the researchers identified 4,818 pump-and-dump attempts between January and July of this year, studying data scrapped by the Telegram and Discord messaging platforms.
The academics admit that while the pump-and-dump schemes examined by them have been conducted similar to those that have occurred in the past, "the recent explosion of nearly 2,000 cryptocurrencies in a largely unregulated environment has greatly expanded the possibilities of abuse. "
The paper notes that "pumping dark coins (at low volumes) is much more profitable than pumping the dominant currencies in the ecosystem", but at the same time "Bitcoin is not immune to the pump-and-dump phenomenon". The report managed to identify 76 pump-and-dump groups of Bitcoin (BTC) on Telegram and six on Discord.
As Cointelegraph reported this month, two bills related to the manipulation of market encryption, dubbed "The Virtual Currency Consumer Protection Act of 2018" and "The US Virtual Currency Market and Regulatory Competitiveness Act of 2018", compiled in mid-November, The United States House of Representatives is ready.
NASDAQ, the second largest stock exchange in the world, said in November that its market surveillance technology can "eliminate manipulation" in cryptographic markets. The first cryptographic client of the NASDAQ that has adopted its surveillance system is Gemini, the cryptographic exchange owned by the Winklevoss twins.
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