The Australian Securities and Investments Commission (ASIC) infiltrated a Telegram group of investors that was coordinating a pump and dump scheme last October and dropped a warning message. Now, the regulator has detailed how it took down a cryptocurrency pump-and-dump group.
In documents provided to the news agency 'The Australian' under the freedom of information request, ASIC revealed its steps in busting up these small, yet sophisticated, market manipulation groups that were rampant on social media and messaging platforms.
Vulnerable Cryptocurrency Markets
The Aussie watchdog has been coordinated and was advised by the financial academic, Talis Putnins, who is known for his 2017 research paper identifying the kinds of illegal transactions with Bitcoin and other cryptocurrencies.
An elaborated presentation by Putnins to the ASIC investigators stated that pump and dump schemes are cyclical. Before the 2021 peak, these market manipulation tactics peaked in 2017. Putnins detailed that he identified more than 355 crypto market manipulation cases in merely seven months in 2017.
Additionally, he pointed out that these schemes became very transparent and are ‘completely out in the open for everyone to see’. The moderators perceived a lack of legal risks, and they are using the anonymity policies of social media and messaging platforms to run these schemes out in the open.
“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,” a message in the Telegram group named Crypto Binance Trading | Signals & Pumps stated, which Putnins showed to the regulatory officials.
The ASIC officials promptly decided to monitor these rampant pump-and-dump groups and even left a warning message in one such Telegram group.
“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 wrote.
Furthermore, the regulator said that these tactics work because if one of these channels is successfully shut, it is hard for the pump-and-dump organizers to gather an audience in an alternate account or platform.
