The scam is simple: a group of investors selects a little-known digital coin to buy cheap, then promotes it relentlessly on social media, making outrageous claims about the coin’s potential. Outside investors get caught up in the hype, and the price skyrockets artificially. After insiders collectively sell, the price plummets, leaving everyone else with losses. It's conspiracy, pure and simple.
While past scammers conspired to pump and dump unknown penny stocks from their boiler rooms, today’s market manipulation schemes are planned in online forums such as Reddit and Telegram. The schemes are often meticulously coordinated; insiders plan the exact times at which they will buy and sell the token, and the pump period sometimes lasts under ten minutes.
The SEC has long considered pump and dump schemes to be securities fraud, and now the CFTC is joining the effort to punish those who perpetrate these schemes in cryptocurrency markets. The CFTC publicly announced that it is seeking whistleblowers to report cryptocurrency pump-and-dump schemes, and CFTC whistleblowers can be rewarded up to 30 percent share of monetary sanctions exceeding $1 million.
If you have inside information about a market manipulation scheme, contact us today for a free evaluation from our experienced whistleblower attorneys.
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