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Traders Are Talking Up Cryptocurrencies, Then Dumping Them, Costing Others Millions (wsj.com)

Posted by msmash on from the gaming-the-system dept.

Dozens of trading groups are manipulating the price of cryptocurrencies on some of the largest online exchanges, generating at least $825 million in trading activity over the past six months -- and hundreds of millions in losses for those caught on the wrong side, according to a Wall Street Journal analysis. From a report: In a review of trading data and online communications among traders between January and the end of July, the Journal identified 175 "pump and dump" schemes involving 121 different digital coins, which show a sudden rise in price and an equally sudden fall minutes later.

A pump-and-dump scheme is one of the oldest types of market fraud: Traders talk up the price of an asset before dumping it for a profit and leaving fooled investors with shrunken shares. The Securities and Exchange Commission regularly brings civil cases alleging pump and dumps using publicly traded stocks. Manipulations of cryptocurrencies are no different, but regulators have yet to bring a case in the more opaque market for them. The SEC declined to comment.

9 of 123 comments (clear)

  1. Costing others millions by nospam007 · · Score: 4, Insightful

    Yep, you got it.
    That's how the market works in a capitalist system, comrade.

    1. Re: Costing others millions by Anonymous Coward · · Score: 2, Insightful

      This is exactly how the stock market has worked for ~200 years.

  2. Shocking truth by Anonymous Coward · · Score: 3, Insightful

    You lost the money the moment you gave it to someone for cryptocurrencies.

  3. NEWSFLASH: by Type44Q · · Score: 5, Insightful

    NEWSFLASH: "A fool and his money..."

  4. Re:No kidding? by Smidge204 · · Score: 3, Insightful

    > At what point does one realize that he's holding the digital equivalent of Monopoly money?

    Probably not until there's nobody left who is willing to buy it off them for real money.

    =Smidge=

  5. Re:Free market by Gojira+Shipi-Taro · · Score: 4, Insightful

    Just who exactly do you think these "investors" are who are BILKING others? That's right. Bankers, or those in banker adjacent industries.

    Regulation exists because an industry has proven themselves UNTRUSTWORTHY.

    --
    "Oh my God. This is terrible. This is the end of my Presidency. I'm fucked."; ~ Donald J. Trump
  6. Re:Profit is merely legalized crime. by sjames · · Score: 3, Insightful

    Yeah! If those old ladies didn't wanna be mugged, what were they doing in the park?

  7. Comedy gold by inking · · Score: 3, Insightful

    Step 1: Buy a non-productive asset.

    Step 2: Somehow miss the point that the asset is not productive and the any wealth gain one may receive is an equal wealth loss for someone else.

    Step 3: Be surprised that sophisticated investors are wiping the floor with your HODL BEFORE I SODL nonsense.

  8. Re: Profit is merely legalized crime. by sjames · · Score: 4, Insightful

    Would you consider fraud to be just another voluntary exchange? Because pump and dump is a form of fraud.