The Australian Securities and Investments Commission (ASIC) has released details of how it infiltrated groups of crypto “pump and dump” telegrams in October.
A pump and dump scheme typically involves the use of social media to coordinate users to buy large amounts of a token with a small volume of trade in order to artificially increase its price. Then they make a big profit after other investors who are not in the program, but FOMO.
New documents show that ASIC has been advised by crypto and finance scientist Talis Putnins since the beginning of October. Putnin’s 38-page presentation revealed that the plans are in place. Pump & Dump is cyclical, peaking in 2018 and back again in 2021.
The presentation stated that they tend to “correlate with general market sentiment and price”.
Pump and dump plans are cyclical and will be implemented in 2018 and 2021 | Source: Talis Putnins
According to the presentation, several factors have changed between 2018 and when it was released in October 2021.
The researcher mentions the “transparent pumping intent” of the plan, and with no “real effort to stimulate the swing,” the plans are “completely open to all to see”.
The presentation details the telegram group “Crypto Binance Trading | Signals & Pumps, which pumped the fractional stablecoin system Frax Share (FXS) on September 19, saw a 90% increase in trading volumes of up to $ 65 million in less than a minute.
The result of the FXS pump in September was a 90% price increase in less than a minute | Source: Talis Putnins
“With an average trading volume of 40 to 80 million US dollars per pump and a peak value of 450%, we are ready to announce our next big pump,” said a statement from the group on September 13th. “Our main goal for this pump is to make sure that all team members make big profits. We will also try to achieve a trading volume of over 100 million US dollars in the first few minutes, with a very high percentage increase. ”
What is Pump & Dump Systems?
The presentation cited the lack of legal, anonymity and cryptographic risks in the forums as potential reasons for implementing pump-and-dump schemes, adding that control is based on “understood crypto-awareness” which makes the pumps legitimate.
This information was reported by The Australian Disclosure on December 28th
Last year Putin co-wrote a article with the title “A new wolf in town? Manipulation of Pump & Dump in the Cryptocurrency Market “.
The report concluded that the crypto pump and dump caused “a 65 percent price variance, abnormal trading volumes of up to millions of dollars and massive wealth transfers between participants.”
On October 15, ASIC examined schemas in cryptocurrency and traditional markets powered by social media such as Twitter, Telegram and the Australian stock chat forum HotCopper.
At the time, a Telegram account called “ASIC” posted a notice on the Telegram chat group “ASX Pump Organization” warning 300 members that the agency was “monitoring the platform” and members of the group were being investigated.
“Coordinated pumping of stocks for profit can be illegal. We can see all transactions and have access to the identity of the merchant. You risk criminal prosecution, including fines in excess of $ 1 million and jail time. ”
An announcement in ASIC’s ASX Pump Organization Telegram group chat | Source: Talis Putnins
“Even if crypto / product-related activities are not a financial product in the sense of the Corporate Act, Pump & Dump becomes a sore point as it can lead to enormous losses for investors and to price volatility,” said an ASIC spokesman.
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