LONDON – “This is the biggest pump community which will help you make money,” reads the ad sent to a Telegram channel with 17,000 followers.
The group in question is the “PumpKing Community.” It is one of many groups on the messaging app that appear to be dedicated to “pump and dumps” — coordinated buying that artificially inflates the price of cryptocurrencies, in the hopes of attracting outside buyers to then “flip” the currency onto at a profit. Other Telegram groups include Pump.im, Crypto4Pumps, We Pump, and AltTheWay.
Cryptocurrency markets remain largely unregulated and so these schemes aren’t technically illegal — yet. However, the same schemes are illegal in the regulated markets that cover assets like stocks and bonds.
Business Insider has detailed the controversy surrounding these kinds of cryptocurrency scams. Scroll down for a step-by-step guide to how they work:
Telegram is the app of choice for cryptocurrency traders. Here is a message sent to advertise the PumpKing Community Telegram channel.
Russian messaging app Telegram is heavily encrypted and, although linked to phone numbers, it allows people to use aliases and hide their identity.
There are scores of Telegram group chats devoted to cryptocurrency trading and they grow by cross promotion. Pictured above is an advert for “PumpKing Community,” one of the pump and dump groups. As you can see, these adverts draw people in with promises of wealth.
Pump and dump scams are coordinated through groups and channels on the app and advertised in advance.
Channels and groups on Telegram are used to coordinate the “pump and dump” scams. Members are told the time of the pump and the trading venue ahead of time to make sure they are ready, but only told the specific coin that is being pumped just moments before to ensure everyone buys at the same time.
The PumpKing Community has over 14,000 users but the above advert claims that over 60,000 people will be sent the pump signal as the announcement in question will be shared to Asian channels.
In this instance, Magi Coin is being pumped on the Bittrex exchange.
At the allotted time, participants are told the coin and sent a link to the venue where they should start buying in.
See the rest of the story at Business Insider …read more
Source:: Businessinsider – Tech