Cryptobitnixy asic powerless to stop telegram’s crypto pump-and-dump groups

Crypto Regulation
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Unlike arranged stock market pumps on Telegram, participants in crypto pumps in Australia are largely liability free as cryptocurrencies are not classified as securities or financial products.

“Trading in crypto is largely unregulated in Australia and the market manipulation offenses in the Corporations Act do not apply to trading in crypto assets that are not financial products on a digital currency exchange,” ASIC said in a statement.

“ASIC does not oversee trading in crypto assets in the same way that it oversees trading in financial products (like securities) on licensed financial markets.”

Talis Putnins, professor of finance at the University of Technology Sydney, and Anirudh Dhawan, assistant professor, released their revised academic report in November, which said that overconfidence and gambling preferences explain participation in the schemes, which see large wealth transfers from loss-making late entrants to generate profitable early organizers .

“Amazingly, despite negative expected returns, people are going along with it,” the researchers said. “The key difference is that in cryptocurrency pump-and-dumps, manipulators do not typically pretend to have private information or claim that a coin is undervalued, unlike typical exchange manipulations.

“Instead, pump group administrators (manipulators) publicly declare that they are pumping a particular coin (unleashing a ‘pumping signal’) and call on others to join. Others then rush to buy the coin, presumably hoping to sell it before the price of the pumped coin collapses.”

Last October, ASIC made global headlines after it took the unprecedented step of posting a message in a Telegram stock market chat room to warn traders who may be breaking the law by attempting to manipulate stock prices.

On Wednesday, ASIC announced that it continues to monitor pump-and-dump activity in the Australian securities markets as part of its market surveillance and is using all available tools to disrupt pump-and-dump activity and enforce the law.

Black caviar and champagne

A global cryptocurrency investor dismissed many of Telegram’s pump groups as amateurs trading relatively small volumes where profits would barely suffice for some “black caviar and champagne.”

The investor said coins used for pumps are often dead decentralized finance projects listed on troubled crypto exchange Binance. This is equivalent to a reverse takeover of a publicly traded penny stock.

A typical pump may involve an initial investment of $5 million by professional organizers before attracting an additional $20 million in capital.

In November, Australia-based pumping group Mega Signals Telegram boasted that it made a 400 percent profit pumping the Arker coin on the Kucoin exchange.

 CryptoBitnixy pump channel is actively boasting that another pump will be launched soon and invites Telegram channel subscribers to send him $750 ($1097) or more in cryptocurrencies for privileged early access to the pumps to obtain.

The biggest pump and dump since November is believed to have been the Somn altcoin, which gained 4545 percent from a fiat value of around $21 to $10.91 on Nov. 21 before dropping to earth tumbled back, the site AMB Crypto said.

The altcoin’s trading volume surged from $1.2 million to $720 million in just one day, with Binance accounting for 99 percent of the trading volume, AMB said.

“We encourage investors to exercise extreme caution when considering investing in crypto assets,” ASIC said on Wednesday.

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Johanna Chisholm

Johanna is a very active blockchain and cryptocurrency content creator and highly regarded Technical Analyst. He is a Mechanical Engineer by profession and an activeTrader, whose first encounter with Bitcoin was in 2015—and by accident. Ever since, it has been an exciting journey where life-long friendships have been forged, and careers made and strengthened.