The ASIC Reveals Data about Crypto ‘pump and dump’ Schemes on Telegram

• Avinandan Banerjee
• December 29, 2021

The chief corporate and financial operator, the Australian Securities and Investments Commission (ASIC) has revealed that it successfully traced various crypto ‘pump and dump’ Telegram groups in October. Talking about this, ASIC shared the details of the procedures adopted by the team to infiltrate the malicious crypto groups on Telegram. The new documents affirmed that the ASIC has been seeking counsel from crypto researcher Talis Putnins since early October.

In a pump and dump scheme, intruders employ social media handles to fulfill their illegitimate operations easily. Here, social media is used to form user groups so as to lure them into bulk buying of a less traded token. The mechanism helps to artificially inflate the price value of the token. The scammers easily pool huge profits after other investors, who are not a part of the scheme, enter the deal triggering massive trade-offs.

According to the 38-slide document by Putnins to ASIC researchers, the pump and dump schemes witnessed a surge in 2021 similar to the 2018 scenario. The presentation conveyed that such schemes are likely to tie up with the entire market trend and affect price values. The investigator said that there are several factors that have changed between 2018 and October 2021.

In a short span of six months in 2018, the cases of such market manipulations in crypto stood at 355, hinting towards the severity of the issue. The document mentioned that these schemes transparently support the pumping of prices, however, they lack genuine attempts to fuel the trading momentum. These schemes are easily accessible to any person. The report revealed information about the Telegram group ‘Crypto Binance Trading | Signals & Pumps’. The group caused pumping for fractional algorithmic stablecoin system, Frax Share in September. The project recorded a huge 90% price rise in less than a minute.

What are the reasons for the success of Pump and Dump Schemes?

The detailed presentation disclosed various reasons for the success of such schemes. These included anonymity of groups, encryption, and lack of legal risk. There is a popular understanding that as crypto lacks regulation, pumps are legal. The presentation concluded that the faulty pump and dump scams have caused severe price manipulations in the industry. They have distorted nearly 65% of price trends on average, triggered abnormal trading operations worth millions of dollars across the field, and aided huge money transfers amongst traders.