In October last year, the Australian Securities and Investments Commission (ASIC) infiltrated a group on Telegram that was coordinating an illegal pump-and-dump scheme. They left behind them their warning message as evidence of what they did so we can avoid being scammed!
The Australian Securities and Investments Commission (ASIC) took down a cryptocurrency pump-and-dump group last October by infiltrating their Telegram chat. They dropped an informative warning message to the other traders that they were likely in violation of some laws, but it didn’t stop there! ASIC then went one step further – detailing how exactly this group was sabotaged from successfully executing its planned scheme on unsuspecting investors.
‘The Australian’ recently published an article about how ASIC busted up these small groups of people who were manipulating markets on social media and messaging apps. The agency released documents under the freedom-of information request, which revealed their steps in doing so.
Unguarded Crypto Markets
The Australian government has enlisted the help of an expert in financial mathematics to keep watch over Bitcoin and other cryptocurrencies. Talis Putnins, who is known for his 2017 research paper ” identifying illegal transactions” with bitcoin , coordinated this effort between two very important sectors – finance & law.
The Putnins brothers were able to articulate a convincing argument for how they believe pump and dump schemes are cyclical. They pointed out that before the 2021 peak, this form of market manipulation peaked in 2017. The information given by these investigators was very informative as well because it shows patterns within different markets around the world which may be related or not- but either way can help investors make better decisions about their investments when investing time into research.
The crypto market is a competitive and fast-paced environment. In just seven months, Putnins identified 355 cases of heavy manipulation in this sector.
Putnins’ point is that these schemes have become very transparent, which makes them ‘completely out in the open for everyone to see’. Social media and messaging platforms have become the go-to place for those looking to gamble in secret. Virtual worlds allow users anonymity, so they are using this lack of constraint as an opportunity to run schemes out their scheme with impunity.
Telegram group called Crypto Binance Trading | Signals & Pumps stated, “Our main goal for this pump will be to make sure that every single member in our group makes a massive profit. We will also try reaching more than 100 million $ volume in the first few minutes with a very high % gain.” Putnins also showed this to the authorities.
The ASIC officials were not going to let these rampant pump-and-dump groups get away with cheating the system so they monitor them closely. When one group started acting shady, their own members got involved and left this warning message for others in case anyone was considering joining up: “Hey buddy! We know what you’re doing over there – don’t do it!”
“Coordinated pumping of shares for profits can be illegal. We can see all trades and have access to trader identities… You run the risk of a criminal record, including fines of more than $1 million and prison time,” ASIC mentioned.
Pump and Dump organizers have been using these tactics to maintain their audience. However, if one of the channels is successfully shut down it becomes hard for them gather an alternate account or platform with ease because they’re dependent on specific social media platforms in order to succeed.