The Australian Securities and Investments Commission (ASIC) has revealed the details of how it took down crypto “pump and dump” Telegram groups back in October.
A pump and dump scheme typically involves using social media to coordinate users to buy large amounts of a thinly traded token to artificially inflate its price. They then cash out with massive gains after other investors, who aren’t in on the scheme, FOMO in on a momentum trade.
The new documents reveal that ASIC has been taking counsel from finance academic and crypto researcher, Talis Putnins since early Oct.
A 38-slide presentation by Putnins to ASIC investigators revealed that pump and dump schemes are cyclical, peaking back during 2018 and again in 2021. The presentation stated that they tend to “correlate with overall market sentiment and prices.”
According to the presentation, there are a number of factors which have changed between 2018 and the time of publication, during Oct 2021. Over a period of six months in 2018, Putnins documented over 355 cases of crypto market manipulation.
He referenced the schemes’ “transparent intention to pump,” and the absence of any “genuine attempt to ignite momentum.” The schemes are “completely out in the open for everyone to see,” the presentation noted.
The presentation detailed the Telegram group “Crypto Binance Trading | Signals & Pumps” Sept 19 pump of fractional algorithmic stablecoin system, Frax Share (FXS),…