What is it?
One of the oldest and most famous ways to get quite unfair profit is the pump and dump schemes. Long story short, a group of shareholders (or raiders) bought and sold shares to each other, raising the price and creating a visibility of demand, and then dumped all to ordinary investors. Previously those manipulations were about only shares, credit documents and currencies, which could easily be tracked by exchange commissions and associations. But now there is a new trend: such frauds begin to be conducted on the cryptocurrency market. It is possible only to observe the facts of these strange transactions, but it is very difficult to expose such communities because of their natural secrecy and habitat in closed chat rooms such as Telegram channels and others. Nevertheless, some of these groups become known, for example, Big Pump Signal – it is a huge community of more than 70,000 followers, that has had a number of successful transactions for several hundred million dollars.
Not gonna get us!
Let’s have a look at some statistics: over the past 18 months there was about 20 billion dollars of investments in ICO. For comparison, in the period from 2014 to 2016, it was only 300 million dollars.
The Big Pump Signal strategy is as simple as other groups has: choose any stock exchange and for the pump actions and announce (or give a signal) about the purchase in the named day and time. It allows participants to create a fever of purchases, and then sell everything quickly. The whole scheme happens in minutes, and successful traders publicly boast of their profits.
For example, in July Big Pump Signal gave its followers the signal to buy a little-known cryptocurrency called cloakcoin, that was made for anonymous transactions. ‘@All always use the wave!’, it was called the anonymous moderator of the group in Telegram. As a result, the price jumped 50% (up to 5.77 USD), before collapsing by almost one dollar in just two minutes. In total, 6,700 deals were made for 1.7 million USD. Just one hour before, the volume of trading on this coin was almost zero.
Is it profitable to be a player in profit?
Of course, the pump-and-dump groups experience not only the joy of profits from transactions. The usual practice in such communities is the so-called membership fees (from $ 50 to $ 200 per month), which gives a certain permanent income for the moderators. And in general, in such groups and chats there is a constant propaganda, an appeal for the game with promises of large winnings, that in practice are rather small.
But suddenly all these activities can turn into a game addiction for the person and generate waves of anger and frustration. Members are beginning to invest their last money to win back previous unsuccessful deals and at least go to zero, can seek advice and support from their chat ‘colleagues’. But what in the end? Most often there is an opportunity to just drop out of the game with nothing and instead of getting ridicule and mocking messages.
Therefore, it is not worth taking part in such schemes – there would be a fair play only!