ASIC reveals how it infiltrated crypto ‘pump and dump’ Telegram groups

ASIC reveals how it infiltrated crypto ‘pump and dump’ Telegram groups

The Australian Securities and Investments Commission has released details about how it eliminated crypto “pump and dump” Telegram groups in October.

Pump and dump schemes involve using social media to help coordinate the purchase of large quantities of a token that is not traded to artificially increase its price. The scheme allows them to cash out quickly after other investors who aren’t part of the scheme, FOMO, or a momentum trade.

New documents show that ASIC has been consulting Talis Putnins, a crypto researcher and finance academic, since Oct.

A presentation of 38 slides by Putnins to ASIC investigators showed that pump-and-dump schemes are cyclical. They peak in 2018 and then again in 2021. They tend to “correlate” with overall market sentiments and prices, according to the presentation.

Pump and dump schemes are cyclical. This is true in 2018, as well as in 2021. Source: Presentation to ASIC by Talis Putnins

The presentation shows that there have been many changes between 2018 and Oct 2021. Putnins has documented 355 instances of manipulation of the crypto market over a six-month period.

He referred to the schemes’ “transparent intent to pump” and the lack of any “genuine effort to ignite momentum.”

Signals & Pumps” Sept 19 pump of fractional algorithmic stablecoin system, Frax Share (FXS), which saw a massive 90% on $65 million volume in less than one minute.

In less than one second, the Sept FXS pump resulted in a 90% price rise. Source: Presentation to ASIC by Talis Putnins

“With our volumes reaching between 40 and 80 million dollars per pump, and peak levels reaching up to 450%, we are ready to announce the next big pump,” said a sept 13 announcement by the group.

Our main goal with this pump is to ensure that everyone in our group makes huge profits. We also plan to reach more than 100,000,000 $ volume within the first few minutes, with a high % gain.

What is the secret to pump-and-dump schemes?

According to the presentation, there were three possible reasons for the groups: anonymity in forums, legal risk and encryption. Additionally, there was a perception that crypto is not regulated, so pumps are legal.

The Australian newspaper received the documents and was able access them through a freedom-of-information request. Dec 28 was the date that The Australian published this new information.

Putnins and a co-author authored a paper last year titled “A new Wolf in Town?” Pump-and-Dump Manipulation on Cryptocurrency Markets

According to the report, crypto-pump and dumps have caused “extreme price distortions at 65 percent on average, abnormal trading volumes of millions of dollars, large wealth transfers among participants”

Similar: ASIC targets pump-and-dump Telegram groups

Cointelegraph reported on Oct 15 that ASIC was investigating schemes in crypto and traditional markets through social channels like Telegram, Twitter, and HotCopper.

A Telegram account called “ASIC”, posted a message to the chat “ASX Pump Organisation” warning its 300 members that the watchdog was monitoring the platform and that its members were being investigated.

“Coordinated sharing of profits could be illegal. We have full access to trader identities and can view all trades. […] A criminal record can result in fines exceeding $1 million or imprisonment time.

Screenshot of an announcement made in ASX Pump Organisation Telegram chat by ASIC Source: Presentation to ASIC by Talis Putnins

A spokesperson from ASIC told Cointelegraph at the time: “Even where the activity relates to cryptocurrencies/products that may not be financial products under the Corporations Act, the pump-and-dump practice is concerning as it can lead to investor losses and create unnecessary price volatility.”

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