Illegal game. How does the scheme “Pump and Dump” on the cryptocurrency market


Exchange Yobit began the countdown to 11 October, it will artificially inflate the price of a random token. The editorial office of “RBC-Crypto” to figure out how and why “Pamyat” digital money and found expert opinions that were the opposite

Yobit exchange with a daily trading volume of $33 million in the evening of 10 October announced that after 22 hours it will start “pampite” one random token on its platform. On the website site even created a separate page which is the countdown to the start of the event.

Representatives of the company wrote that they would buy the chosen cryptocurrency 1 BTC every 1-2 minutes and repeat this action 10 times. Only they will buy a certain allcoin for 10 bitcoins, equivalent to $62.8 thousand at average exchange rate on 11 Oct. Such manipulations should lead to an increase in the cost of the asset, which is then dramatically reduced because users will begin to actively sell at the best price.

This scheme called a “Pump and Dump”, and it appeared long before cryptocurrencies. In the stock market this is usually used cheap securities of small companies, they can influence a small number of investors. However, it is officially recognized as fraudulent and regulated by the state.

In order to convince users to buy a particular asset, scammers use fake positive news and “insider” information that most often has nothing to do with reality. In order to control this sphere, the government introduced more stringent regulation, and many traders who staged the “pampas”, was behind bars.

However, the blockchain industry, which originated a few years ago, at the moment not regulated in most countries of the world. There are hundreds of cheap little-known tokens, the value of which can be easily influenced. Also played a role in the development of instant messaging, where you can stay anonymous and attract a large number of investors.

The scheme is the “Pump and Dump” has become very popular in the field of digital money, but the community would not cease talking about what the value of the cryptocurrency are being manipulated. The attorney General of the state of new York on September 18, 2018 published a study of the work of cripture, according to which most of them do not have services for track manipulation.

Usually scammers choose exchange and cryptocurrency, the value of which they artificially inflate. First, they buy a token in small portions so as not to affect his course ahead of time. Then they begin the “pump” — through their channels of misleading investors about the imminent increase in the value of a particular cryptocurrency on the same exchange. All participants in the fraud should, in a certain time to purchase this asset.

The reasons for the growth rates do not always fictional, criminals can use real infopovod in order to explain the nature of the rise in price of crypto-currencies. Investors buy a certain asset, due to the large tidal resources, the rate rises sharply. At this point, the organizers sell the asset at an inflated price, there is a “dump” — its price is crashing.

Almost always, even despite the lack of regulation of the market of digital money, the pampas, are hidden from prying eyes — in private chat, and so on. All the user has to guess the reasons for the growth in the value of certain tokens after the price repeatedly rose and fell.

Therefore, the case with the exchange Yobit unusual. In the comments under the post, many users couldn’t believe such blatant arrogance — they hoped that the Twitter account exchange somebody hacked, but the link to the page with the countdown proves the opposite.

Yobit — exchange, adapted to the CIS, according to statistics of the trading platform, it uses many Russian-speaking traders. In the web you can find negative reviews and comments about it, people write that the interface runs very slow, and some complain that can not withdraw funds for a long time.

Perhaps this move with the announcement of the “Pampa” random currency — actually a bluff. Maybe the user of the trading platform thus trying to show how unsafe the market of digital money and how easy it is to manipulate them. In this case, when the countdown is over, no promise of “Pampa” is not really going to happen.

However, this is only speculation, as will be actually, we will know very soon. The expert “International financial centre” Olga Prokhorov believes that a fraudulent scheme plays into the hands of only a limited number of traders, insiders, and most of the participants suffer losses.

“This is a classic example of the earnings on the losses of others. If a similar scheme will be implemented by the exchange Yobit, it will lead to even greater disappointment of investors in cryptocurrency, because it will once again demonstrate its weak regulation, and a kind of anarchy. To participate in “Pump and Dump” — it’s like to participate in the financial pyramid — earn is possible, but extremely unlikely,” — says Prokhorov.

Do not agree with it the analyst of the company “Finist” Alexander Ageev. He believes that “Pump and Dump” — it is a normal situation, manipulation of currencies, which are not included in the top 10, you will not have any impact on the community and the market. According to the expert, the exchange Yobit may be trying to attract new customers who want to make money.

“She does bad is not threatened, perhaps even positive it will be affected,” said Ageev.

According to the adviser of the Chairman of the Association “Financial innovation” Murad Salikhov, Yobit doesn’t care about his reputation. The exchange’s management only care about how to get rich on the cryptocurrency market, which is now in decline. The specialist added that the cost of bitcoin does not grow including the improper behavior of some trading platforms.

Senior analyst AMarkets Artem Deev called the publication of the exchange’s curious initiative, for which interesting to watch. The expert stressed that the cryptocurrency market is characterized by high creativity of all its participants.

Experts have expressed opposing views about the situation with the exchange Yobit, the main thing is that this situation demonstrates the extent to which the market cipovych money needs to be regulated. Maybe the authorities will pay attention to this event and take certain decisions to make the cryptocurrency more secure, it will help its wider acceptance.

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