Crypto Market Rife With Pump-and-Dump Schemes, Study Shows
- Almost 5,000 identified on Telegram and Discord messenger apps
- Fraud proliferated in regulatory vacuum, research paper finds
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Scammers have been successfully manipulating the price of digital assets including Bitcoin so they can dump their holdings onto unsuspecting traders at a higher price, according to a new academic paper mapping out the extent of market abuse in cryptocurrencies.
Researchers identified 4,818 so-called pump-and-dump attempts between January and July, using data scraped from Telegram and Discord, two encrypted messaging apps popular with the cryptocurrency community. The scale of the fraud is “widespread and often quite profitable,” and should alarm regulators, according to the draft published in SSRN, a repository of academic research.