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A study released on the 5th of August by the Wall Street Journal, it claims that the price of cryptocurrency was being manipulated by organised trading groups using apps like Telegram.
While presenting the results of research into cryptocurrency markets, the Wall Street Journal proposed that organised pump and dump schemes have seen traders crash and inflate the prices of various digital currencies this year.
Consequently, it says such groups are making hundreds of millions of dollars in profits for themselves, while others get hit by losses once the groups sell off a particular cryptocurrency en masse.
Trading groups made profits as high as $825 million In the first six months of this year alone.
The Wall Street Journal observed about 175 schemes trading 121 different crypto’s, they stated “[m]any more such groups exist, potentially adding millions or tens of millions more in activity,” adding that they “operate in private chat rooms, accessible only by invitation, generally managed by an anonymous moderator.”
An example of such trading group patterns, the Wall Street Journal takes Cloakcoin, an older altcoin that saw several pumps in price this year.
Shady trading groups
A sudden growth spurt occurred on the 1 of July on a famous cryptocurrency exchange Binance was as a result of a trading group called Big Pump Signal, the Wall Street Journal reported.
“Shortly after Big Pump Signal sent a message on Telegram to followers telling them to buy, the price of Cloakcoin hit the roof on Binance,” the research says.
“Prices of Binance's ten most-traded bitcoin pairs barely moved during the Cloakcoin pump.”
The research added a new dimension to market manipulation theories which have surrounded cryptocurrency markets in recent months.
For Bitcoin, various sources have claimed factors such as major whales like Mt. Gox and liquidation sell-offs have caused artificial price fluctuations since the all-time highs on December 2017, while others have claimed no such activities had affected the crypto markets in any way.
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Pump and dump is a way of life for many. I won't partake in it its sad though because it keeps me away from all telgram groups. There's just too much crap in any group to make it worth it.
Many groups just pump in more and more people to build an influence on others. And to send them notifications and commands to do actions that are only profitable for the group owner.
Pump and dump groups are ALL OVER telegram can hardly get away form them! bringing a bad name to the space
Crypto and blockchain is so popular these days, everybody wants to integrate even if it is not necessary. Many people want to buy and sell coins, that is why it is so much abused these days. But it is a free market and people will adapt to it. Later on they will not make the same mistakes and it will be harder to manipulate the market.
Very true. Big whales are manipulating the crypto market for their vested interest.
Unregulated market, what a gift to the ones who can manipulate them, right? :) And I have also noticed that there are so many groups on Discord and Telegram, who give buying advice.
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I agree, and to me that event last year was all manipulated for those Guys who have a lot of money make more and more money.