Thousands Crypto Pump-and-Dump Groups Found On Messaging Apps

A study recently published by the Social Science Research Network (SSRN) revealed a surprising number of crypto pump-and-dump groups on different messaging apps.

What’s Pump-and-dump

It’s a fraudulent technique of encouraging investors to invest in an asset to give its price a boost only to quickly sell it at a profit.

Since the price of cryptocurrencies largely depends on demand or market capitalization, it is possible to inflate the price temporarily to make a profit.

The technique is not only prevalent in this industry but for several other assets as well.

What the Report Has to Say

This is not the first time that we hear of this technique. In fact, Telegram was last year in the news for a number of groups chats getting involved in such activities.

However, the new report provides shocking numbers as it suggests the technique to be “widespread and often quite profitable.”

The study took data from January to July from several messaging platforms including Discord and Telegram. The researchers identified a total of 4,818 pump-and-dump attempts from the two platforms.

The report said:

“The recent explosion of nearly 2,000 cryptocurrencies in a largely unregulated environment has greatly expanded the scope for abuse.”

It further highlights how “pumping obscure coins (with low volume) is much more profitable than pumping the dominant coins in the ecosystem.”

Anyone Can be a Victim

According to the report, no currency – not even Bitcoin  – is immune to the phenomenon. While some may receive a bigger hit, they’re all at the receiving end.

The report found a total of 82 Bitcoin pump-and-dump groups on the two platforms with 92% of the groups on Telegram.

The Authorities Are Ready to Fight

Two bills related to crypto market manipulation are set to go before the United States House of Representatives.

Called “The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018” and “The Virtual Currency Consumer Protection Act of 2018,” the bills are designed to protect cryptocurrencies from such attacks.

Many exchanges, including NASDAQ, are said to be working on a system that can prevent such manipulation. Gemini has already adopted NASQAD’s surveillance system, but we’re not yet sure of its effectiveness.

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