Cryptocurrency ‘Pump and Dump’ Schemes Coordinated In Telegram, Report SaysNovember 15, 2017 5:58 pm
A huge jump in a cryptocurrency prices often entices users to buy into that particular coin, Cointelegraph reported Wednesday, but sometimes the eagerness to buy in leaves users with a huge loss.
The lack of regulation means scams to cause this sort of price manipulation are not illegal in the crypto world.
The Russian app, Telegram, appears to be the main venue where the pump and dump schemes are being perpetrated, the report said.
A number of channels within Telegram are designed specifically for just this sort of market manipulation, the report continued.
With names like PumpKing Community, Crypto4Pumps and We Pump, these communities provide a venue for scammers to attract participants who then help the price move, the report said.
These channels offer information on specific coin pumps to those who subscribe and then encourage subscribers to buy in quickly, the report said. After prices increase, members reach out in other social media, encouraging further buying from unsuspecting victims, the report said. As the price continues to rise, the pumpers begin to sell, causing panic selling, and collapsing the price, resulting in the ‘dump.’
The victims are left with the coin value often ending lower than it did before the scam, the report said. The entire process is a scam from start to finish. With the SEC and other international regulating bodies maintaining oversight, this phenomenon may be reduced, the report said. However, for now, buyers should avoid such jumps unless underlying fundamentals provide reasons for the change.
– WN.com, Jack Durschlag