The Australian Securities and Investments Commission (ASIC) revealed details of how it banned cryptocurrency groups that “pumped and flopped” in October.
The pump-and-dump scheme usually involves using social media to coordinate users to purchase large quantities of slow-trade tokens to artificially inflate their prices. They are then paid out for large profits after other unplanned investors succumb to FOMO and buy into momentum trading.
New documents show that ASIC has been consulting finance academic and crypto researcher Talis Putnins since the beginning of October.
Putin’s presentation of 38 slides to ASIC investigators showed that pumping and dumping patterns are cyclical, peaking in 2018 and again in 2021. The presentation said they tend to “correlate with market sentiment and prices.”
The pump and discharge schemes are cyclical, peaking in 2018 and again in 2021. Source: ASIC presentation by Professor Thales Botinis.
According to the presentation, between 2018 and the time of publication, until October 2021, several factors have changed. During the six months of 2018, Botnis documented more than 355 cases of manipulation in the cryptocurrency market.
He noted the “transparent purpose of the pump circuits” and the lack of a “real attempt to ignite the speed”. The maps are “completely open to the public,” as the presentation notes.
The presentation described the Telegram group “Crypto Binance Trading | Signals and Pumps” Frax Share Frax Share System (FXS) Fractional Algorithmic System (FXS) now pumps out on September 19 and reaches 90% with a gigantic volume of $ 65 million in less than a minute .
FXS September pump increased prices by 90% in less than 1 minute. Source: ASIC Presentation by Professor Thales Botinis.
“With our volumes averaging $ 40 million to $ 80 million per pump and peaks at 450%, we are ready to announce our next major pump,” the group said in the September 13 announcement.
“Our main goal with this pump will be for each member of our group to generate huge profits. We will also aim to reach a volume of over $ 100 million in the first few minutes of very high earnings.”
What is behind the pumping and emptying schemes?
The presentation cited an alleged lack of legal risk, forum anonymity and cryptography as possible reasons for the groups, adding that there is a “perception that cryptocurrencies are unregulated, so pumps are legal.”
The new information was revealed in documents that the Australian newspaper gained access to through a request for freedom of information. Australians released new information on Tuesday.
Last year, Putin co-authored an article entitled “New Wolf in the City? Pumps and dumps in cryptocurrency markets. ”
The report concluded that cryptocurrency pumping and dumping led to “severe price distortions of an average of 65%, abnormal trading volumes in the millions of dollars and significant transfers of wealth between participants.”
RELATED: ASIC Targets Telegram and Dump Pump Combinations
On October 15, the Cointelegraph reported that ASIC was investigating schemes in crypto- and traditional markets operating through social channels such as Twitter, Telegram and the Australian HotCopper chat forum.
At the time, a Telegram account called “ASIC” posted a message on the “ASX Pump Organization” chat to alert its 300 members that a watchdog “monitors this platform” and that members are under investigation.
“Coordinated sale of shares for profit may be illegal. We can see all trades and gain access to the identity of the trader. […] You risk a criminal record, including over $ 1 million in fines and imprisonment. ”
Screenshot of the announcement in ASIC’s ASX Pump Organization Telegram chat. Source: ASIC Presentation by Professor Thales Botinis.
An ASIC spokesman told Cointelegraph at the time: “Although the activity is related to cryptocurrencies / products that may not be financial products under company law, the practice of pumping and dumping is worrying as it could lead to investor losses and create unnecessary price volatility.” .