In an interdisciplinary study, researchers found that there are several pump-and-dump schemes on messengers such as Telegram and Discord. In the unregulated Bitcoin market, it is easy to make profits quickly without having to reckon with consequences.
The editors of the study “The Economics of Cryptocurreny Pump and Dump Schemes” found out what should surprise few. They examined the Telegram and Discord platforms and found that they contained a whole lot of the popular fraudulent method of making money quickly.
How are the Bitcoin news?
The schemata function according to the greater fool principle. The point is to invest in a coin in time while it is rising (pump). Then it’s about selling again at the best price, i.e. just before everyone gets out and the price falls (dump). The participants of such Bitcoin news groups are aware of this. In Bitcoin news, everyone who is a member of such a group knows that the initiators of the group benefit most from it. The hope is then, on the one hand, to be faster than the other members and, on the other hand, that a rapid rise in the share price leads to “outsiders” becoming aware of this and investing additional capital.
The telegram groups are mostly pure reading channels: One can read there only the announcements of the initiators. First they announce in advance the exact date and the stock exchange of the upcoming pump and dump. Then, shortly before it starts, the start signal is given: The coin is named. Who then invests in time and gets out again gambles the money off the next bigger idiot.
Bitcoin news: Lack of regulation favours gambling
The researchers of the Bitcoin news study now found out that a total of 3,767 different groups cavort on telegram groups, a total of 1,051 on Discord. Read more about it: http://www.onlinebetrug.de/en/bitcoin-news-trader-scam The researchers identified a total of 300 different crypto currencies that were used for these methods.
Ultimately, the researchers concluded that it is usually smaller and less known currencies that are pumped and dumped. This is less profitable for the big ones such as Bitcoin, Ethereum, Ripple and the like.
The fact that such fraud is ultimately possible is due to a lack of regulation: it is simply not forbidden to participate. The next big pump and dump will take place on 23 December at Binance at 17:00 GMT. However, participation is strongly discouraged.