The pump and dump is alive and well in the world of digital currency.
Online trading groups are carrying out cryptocurrency price manipulations on a large scale, leading to hundreds of millions of dollars in losses for investors, The Wall Street Journal reported Sunday.
Dozens of these schemes have generated at least $825 million in trades in the last six months alone, the Journal found, citing its analysis of online trading data and trader communications on messaging apps Telegram and Discord.
Pump-and-dump schemes promote an investment to drive up its price, encourage others to buy in, then sell, or “dump” it, leaving investors with the losses. The Securities and Exchange Commission hasn’t prosecuted crypto pump-and-dump fraud the way it does similar schemes relating to stocks. But give it time, the regulator still has to get its sea legs.
The SEC declined to comment on the crypto pump and dumps, according to the report. Read more here.