Almost 5,000 pump and dumps studied in 6 months. Schemes are 'widespread'

24 Dec, 2018
by Arthur Sillers
Almost 5,000 pump and dumps studied in 6 months. Schemes are 'widespread'

A paper out of the  Social Science Research Network (SSRN) entitled The Economics of Cryptocurrency Pump and Dump Schemes, makes the claim that ‘regulators should be very concerned that price manipulation via pump and dump schemes is so widespread.’

SSRN’s research examined a total of 4818 schemes, organized on Telegram and Discord, which took one of three forms: ‘obvious pumps,’ ‘target pumps’ and ‘copied pumps.’ While obvious pumps were defined by using the words ‘pump’ and ‘dump’ explicitly, the report also examined slightly more sophisticated operations, in the form of Target Pump channels. These channels avoided speaking explicitly about market manipulation, but were nonetheless identifiable as targeting specific cryptotokens to build up and sell off on an organized scale. Copy Pumps merely reported on other pumps occuring, and were utilized in order to find organized and malicious groups, as well as for completeness of data.

The results of the SSRN’s paper show that pump schemes can raise the price of coins as much as ‘18 percent’ or more in some cases in just under 5 minutes. The report also found explicitly that less popular coins were more often targeted, and were more susceptible to manipulation, but that even Bitcoin was the target of 82 pumps during the course of the study.

The paper, reported by Cointelegraph comes shortly after a similarly focused case study which examined a specific instance of a pump-and-dump enacted through Telegram, and purported to be able to predict them. The study by the SSRN took a wider lens, and claimed to give a sense of how rampant and effective pump-and-dump schemes are, and what their effect on the marketplace is.

Read more: Bithumb allegedly uses promotional activities to pump transaction volume 

Clearly, there is a massive amount of attempted and apparently successful market manipulation. As crypto becomes more mainstream, and continues to come under the purview of the SEC and other regulators, politicians and those taking advantage of an unregulated market will come head to head. While crypto has been the wild west since its inception, there is simply too much money floating around for those in power to want to let it remain that way.

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Read more about: Bitcoin (BTC)


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