Shane Shifflet and Paul Vigna of The Wall Street Journal analyzed the activities of tens of groups of traders who manipulated the price of large cryptomeria. Journalists claim that in the last six months at such manipulation cryptocurrency traders earned $825 million
After examining trading data and channels of communication between traders in the period from January to the end of July, Shifflet and Vina has identified 175 schemes pump-and-dump (“pump and dump”, the sudden rise and equally sudden fall in the exchange rate), which involved 121 cryptocurrency.
One of the biggest (and effective) community is a group of Big Pump Signal, which has more than 73 000 participants in the Telegram. After launching its channel in the messenger at the end of December, as well as chat in the shell group held 26 schemes pump-and-dump with a total trading volume of $222 million Also there are many other similar groups with millions of turnovers, but they are in private chat, to which access can only be obtained by invitation.
Strategy Big Pump Signal is simple: announce the time and the market for pumps within the prescribed period on the “signal” traders are beginning to buy up coin, by increasing the rate, and then quickly sell it. All this can happen in a few minutes. For example, in early July on channel BigPump Signal in the Telegram was a message from the moderator about pumping a little-known coins on the exchange Сloakcoin Binance. The reaction was instantaneous: the price of Cloakcoin has jumped by 50% (up to $5,77) on the stock exchange and within two minutes fell by almost a dollar. All was done 6700 transactions for $1.7 million
Such schemes were very popular in the period of the dot-com bubble, and they involved large brokerage firms, including the notorious Stratton Oakmont, based on “the wolf of wall street” Jordan Belfort. In 1999, Belfort pleaded guilty to securities fraud, which affected 34 of the company and cost investors more than $200 million.
The exact number of such groups cannot be established, but the researchers found at least 63 active community who do not hide their goals. This Orion Pump, MEGA Pump, A + and other Signals. Most of them coordinate their actions in the Telegram and the shell, where the total number of participants at the end of July reached 236 000 people. The creators of the Big Pump Signal, as well as other active groups, retain complete anonymity. Many of them take a monthly fee for participation in the group — from $50 to $250. It is unknown how much money earns a regular participant in such communities, but the administrators certainly have the advantage when you select coins by buying it at a minimal price and selling them at a set peak.
According to Dave Jevans, General Director of the analytical company CipherTrace for traders it just gambling. All of them are involved in this madness, trying to get a quick profit. The longer they wait the growth rates, the more money you can earn, but also increase the risk of losing everything when the inevitable collapse.