ASIC infiltrates Telegram crypto 'pump and dump' groups

The Australian Securities and Investments Commission (ASIC) has revealed the specifics of how it dismantled a crypto “pump and dump” Telegram group in October. After other investors, who aren’t part of the scam, get FOMO and buy in on a momentum trade, pump-and-dump schemes typically involve using social media to link users together

The new papers show that the ASIC has been consulting with finance professor and crypto researcher Talis Putnins since early October.

Putnins provided a 38-slide presentation to ASIC investigators, demonstrating that pump-and-dump schemes are cyclical, peaking once again in 2021. According to the presentation, they “correlate with overall market sentiment and prices.”

Pump-and-dump schemes are cyclical, peaking in 2018 and again in 2021. Source: Presentation to ASIC by Professor Talis Putnins

According to the presentation, a number of circumstances have changed since October 2021, when it was written. Putnins has recorded over 355 instances of crypto market manipulation over a six-month period in 2018. “The transparent aim to pump” and the lack of any “genuine attempt to kick start momentum” were among his criticisms

The presentation described the Telegram group “Crypto Binance Trading | Signals & Pumps,” which was a fractional algorithmic stablecoin system, Frax Share (FXS), with a massive 90% on $65 million volume in less than one minute.

The outcome of the September FXS pump was a 90% price increase in less than one minute. Source: Presentation to ASIC by Professor Talis Putnins

The pump appears to have lost a significant amount of money since its inception, which is perhaps why it was shut down. “With our volumes averaging 40 to 80 million $ per pump and peaks reaching up to 450%, we are ready to announce our next major pump,” stated a September 13 press release from the group.

“Our main goal for this pump will be to make sure that every single member in 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.”

What’s behind pump-and-dump schemes?

According to the presentation, there are a variety of reasons for these organizations, which include the perception that crypto is unregulated, anonymity in forums, and encryption. The

Last year, Putnins wrote a paper titled “A New Wolf in Town? Pump-and-Dump Manipulation in Cryptocurrency Markets.” The study found that pump-and-dump schemes have generated “devastating price distortions of 65% on average, massive trading volumes in the millions of dollars, and substantial

The Australian Securities and Investments Commission (ASIC) has reportedly been looking into social media-based trading schemes that operate across both crypto and traditional markets, according to Cointelegraph on October 15.

ASIC, according to The Australian Financial Review, had 1.2 million followers and leveled accusations of fraud against the cryptocurrency market in China. It also claimed that authorities were closing in on its members. In response, a Telegram account named “ASIC” published a message on the “ASX Pump Organization” chat warning its 300 members that the regulator was

“Coordinated pumping of shares for profits can be illegal. We can see all trades and have access to trader identities. […] You run the risk of a criminal record, including fines of more than $1 million and prison time.”

The Australian Securities and Investments Commission (ASIC) stated at the time: “Even when the activity relates to cryptocurrencies/products that may not be financial products under the Corporations Act, pump-and-dump scams are worrisome because they can result in investor losses and create unnecessary price volatility.”

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