CFTC Announces Bounty for Exposing Pump and Dump(PnD) Scam
The US CFTC( Commodity Futures Trading Commission) has finally decided to curb down hard to the pump and dump groups. The CFTC has announced bounty for anyone who come forward to expose the pump and dump groups. Pump and dump groups are increasing day by day.
“Customers should not purchase virtual currencies, digital coins or tokens based on social media tips or sudden price spikes. Thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts,”
CFTC has come up with an excellent idea to crackdown pump and dump groups by announcing bounty on these pump and dump groups and asked people to report the pump and dump groups to the CFTC to get hefty bounty. The document stated:
“If you have original information that leads to a successful enforcement action that leads to monetary sanctions of $1 million or more, you could be eligible for a monetary award of between 10 percent and 30 percent.”10% to 30% comes around $100,000 to $300,000. This is a considerable amount and can lure greedy investors to expose one of the groups. This is one of the kind hard crackdown from the regulator. Recently, CFTC agreed to consider the ICO's as securities and coins trading on the crypto exchanges as the overall market has reached close to trillion dollars recently.
“Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes” is a two-page document that was made by the CFTC, “advising customers to avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies and digital coins or tokens.”
What are Pump and Dump groups?
Pump and Dump groups are usually a chatgroup or forums who artificially influence the prices of cryptocurrencies listed on various exchanges for a short period. Usually, the pump and dump group moderators starts buying a coin in large quantities to artificially increase the prices of the coin initially.
Then, after they are all in moderators start marketing his coin by making them to buy the coin at inflated price by telling them it is 50% or 40% up and about to go up to the higher percentage. At that time normal followers start buying and at the same time moderators start dumping their positions.
CFTC further explained:
The activity is although nothing new and was earlier followed in stock market. Now since it is an huge unregulated market, fraudsters are making use of the opportunity before it gets regulated.The CFTC has received complaints from customers who have lost money to pump-and-dump schemes. While its regulatory oversight authority over commodity cash markets is limited, the CFTC maintains general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce. In addition, some of the coin exchanges are taking measures to identify and block accounts that participate in pump-and-dump activities.
The CFTC has provided following guidelines for investors:
- Don’t purchase digital coins or tokens because of a single tip, especially if it comes over social media.
- Don’t believe ads or websites that promise quick wealth by investing in certain digital coins or tokens.
- Do not participate in pump-and-dump trades; market manipulation is against the law and many participants end up losing money.
- There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.
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Posted from my blog with SteemPress : http://cryptoyogi.co/2018/02/19/cftc-pump-n-dump/