Neregularitati market, anonymity and relatively low trading volumes have made the cryptocurrency market a lure for swindlers using Pump&dump for the manipulation of digital assets. Researchers from the Social Science Research Network (SSRN) found in popular messengers Telegram and the destruction of thousands of groups created for the organization Panov and dumps in cryptocurrency market.
Diagram of Pump&dump has long been known in the cryptocurrency market. Most scammers implement it in a specially created channel, “signals”, which supposedly has insider information. Investors reported on the growth of this token at a particular time. A few minutes before the “hour X”, the scammers themselves are beginning to buy up the token in large volumes, which leads to a growth in its value. Seeing the “triggered signal” investors are also starting to buy the coin but at an inflated rate. When scammers see that the rate has peaked and growth has stopped, they lose tokens, bought at the lowest price. The release of enormous amount of the asset to the market causes a sudden collapse of the course and many investors simply do not have time to sell your coins at a high rate, incurring losses. Pump&dump has completed its cycle.
Although, there are closed community, everyone is coordinated, but to get into a team is not so simple.
The researchers claim that the analysis of the data extracted from the messengers, they found 4818 attempts to manipulate the stock market during the first half of 2018.
In SSRN note that such strategies are quite profitable and not only apply to the little-known virtual currencies that much easier “, pumpity” due to the low capitalization, but also against the leaders and even bitcoin. The team found 76 communities to coordinate Panov and dumps BTC in Telegram and 6 in the shell.