The Australian Securities and Investments Commission (ASIC) has given insight into how it cracked down on “pump and dump” groups on Telegram. The regulatory body noted that it cracked down on these groups in October.
The report from the ASIC notes that the regulatory body took advice from Talis Putnins, a crypto researcher and finance expert.
ASIC sheds insight on pump and dump techniques
Putnins gave a presentation to ASIC investigators where he noted that pump and dump techniques happened in cycles. He noted that these schemes have been high in 2018 and 2021.
The 38-slide presentation further notes that several factors had changed between 2018 and October 2021. He noted that within six months in 2018, more than 355 cases of manipulation in crypto asset prices were identified. He referred to these cases as a “transparent intention to pump.”
One of the groups that Putnins highlighted was the “Crypto Binance Trading /Signals & Pumps.” On September 19, this group pumped Frax Share, which saw $65million trading volumes in under one minute.
On September 13, the group noted, “with our volumes averaging 40 to 80 million $ per pump and peaks reaching up to 450%, we are ready to announce our next big pump. Our main goal for this pump will be to make sure that every single member of our group makes a massive profit. We will also try reaching more than 100 million $ volume in the first few minutes with a very high % gain.”
Cracking down on the pump and dump social platforms
In mid-October, the ASIC announced it was launching investigations into illegal schemes on social media platforms such as Twitter, Telegram and other chat forums.
A Telegram account dubbed “ASIC” posted a message to a Telegram chat, warning the 300 members that the ASIC was monitoring their activities. The regulatory body warned that pumping shares for-profits were an illegal activity and that the ASIC had oversight over traders’ identities.
“You run the risk of a criminal record, including fines of more than $1 million and prison time,” the regulatory body warned.
The ASIC further stated that the pumping of shares was also illegal in the crypto market despite digital assets not being classified as financial products. The pump and dump strategy used by traders can be a concerning trend because it could trigger major losses for investors and lead to price volatility.
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