The American regulatory authority Commodity Futures Trading Commission (CFTC) has launched a “Whistleblower”program, the “Pump and Dump” groups and initiators may be reported. The CFTC makes its announcement, to regulate the crypto-currency market in terms of better consumer protection.
In the release the CFTC “Beware of Virtual Currency Pump-and-Dump Schemes,” warns the regulatory authority explicitly to the fact that the crypto currency market is (still) heavily manipulated. “Pump-and-Dump” groups can be individual crypto-currencies drive within few minutes to the top and just as quickly fall down.
The Internet and social media make such “appointments” to a Pump-and-Dump is very simple. Through the public dissemination of the views of such actions can be achieved within a very short time a large number of persons and capital. The initiators, at a certain time, the start signal and all of the followers of the group pumps their capital to the (almost) the same time in the crypto-currency.
At the highest point, which the initiators determine, given the sell signal. The initiators are the First to invest in the currency at a low price, and the First to save the recovered capital in a different currency. The followers of the group can then only react, and hope that you can still sell them at a better price than you have bought. Most of the action is worth it mainly for the initiators.
Such groups are actually not uncommon. There are even individual web pages, as Pumpmycoin, offering all the Communities.
Especially smaller, unknown crypto popular destinations of the “Pump and Dump”groups are currencies. An example from the recent past, the E-Coin, the 06. February, within a very short time a rate increase of approximately 4. 000 percent was recorded, and a day later, on 07. February is the perpendicular dropped again just as quickly. The market capitalization of ECN has risen from 30 million to 1.4 billion USD within a matter of hours. After the vertical drop, it was just still at 18 million USD.
The CFTC has now created a website where such “Pump-and-Dump” promotions and information about the parties Involved can be reported.
If you can provide information leading to a successful enforcement action (for cash over $ 1 Million), met with a reward of between 10 and 30 per cent is even possible.
In the release the CFTC warned, and blind, and to make only on the basis of recommendations of individual persons or due to blatant price increases, investment. The CFTC represents, in our view, a very sensible opinion:
Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes. Thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts.
Before you invest in crypto-currencies, should be used several sources for information discovery and a detailed Research has to be the top priority.
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