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Crypto Pump and Dumps Have Generated $825 Million in Activity This Year: WSJ

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Price manipulation involving ‘pump and dump’ schemes are alive and well in the cryptocurrency market. According to new research by The Wall Street Journal, organized cryptocurrency groups have generated at least $825 million in trading activity over the past six months.

Pump Groups Thrive in Nascent Crypto Market

In a comprehensive review of trading data and online communications among crypto traders between January and July, WSJ identified 175 pump and dump schemes spanning 121 different coins. Among the 50 pumps with the biggest increase in price, nearly half had lost their value.

Among the dozen pump groups analyzed by WSJ, Big Pump Signal and its 74,000 Telegram followers have had the biggest impact on markets. The group engineered 26 pumps resulting in $222 million in trades.

Pump schemes have exploded over the past 18 months as initial coin offerings (ICOs) garnered mainstream attention. More than $12 billion has flowed into coin offerings since January 2017, according to ICOData.io, inviting a new form of speculation in markets that remain largely unregulated to this day.

Analysts say most pump and dumps following a similar pattern: the group announces a time and exchange for a pump; at the set time, traders execute the signal, creating a short-term buying frenzy; after a set time (usually a few minutes), the coin is sold for instant profit.

One of the biggest pumps in recent memory came in early July after Big Pump Signal commanded its followers to buy cloakcoin (CLOAK), an obscure cryptocurrency that purports to be “fully private, secure and untraceable.” After the call was made, CLOAK spiked 50% on Binance before plummeting more than 20% after two minutes.

Stopping the Fraud

Although the pump and dump is one of the oldest forms of market fraud, regulators have struggled to stem the practice. As WSJ reports, similar practices were banned in the 1930s, but that hasn’t stopped pump and dumps from proliferating at different points in history. Jordan Belfort, whose life was chronicled in the movie “Wolf of Wall Street,” pleaded guilty in 1999 for running pump and dumps costing investors more than $200 million.

The U.S. Securities and Exchange Commission (SEC) regularly deals with pump and dumps in the stock market, but has yet to bring a case involving cryptocurrencies. In the meantime, the U.S. Commodity Futures Trading Commission (CFTC) has offered a reward for anyone who warns the agency about potential pump and dump schemes involving cryptocurrencies.

“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,” a CFTC memo, released in February, read. That translates into a potential reward of at least $100,000.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Altcoins

Stellar Lumens Quietly Leads Crypto Market Recovery as Fidelity Rumors Circulate

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Stellar Lumens has put up double-digit gains over the past week, buoyed by improving fundamentals and rumors of a potential partnership with Fidelity Investments.

XLM/USD Update

The XLM price experienced little movement on Sunday, as the overall market made tepid gains. At the time of writing, XLM was down 0.8% at $0.2415. Against bitcoin, the cryptocurrency was down 2%, according to CoinMarketCap.

Compared with seven days ago, XLM has gained more than 13%. Lumens peaked near $0.2500 on Saturday. Over the same period, the broader cryptocurrency market rose 4%. Bitcoin is up just 3.4% over the same period while Ethereum gained 3.7%.

At current values, the Stellar blockchain has a total market capitalization of $4.6 billion. Trade volumes in the last 24 hours reached $48.1 million. Binance, BitMart and BCEX are the largest markets for XLM trades, according to the latest available data.

This isn’t the first time XLM has outperformed the broader market. Lumens managed to hold its ground during the mid-August slump, a period that was associated with a 21% drop in Ethereum and a nearly 40% plunge in IOTA.

Fidelity Rumors Circulate

The latest upsurge in Stellar’s price follows speculation that Fidelity Investments may consider adopting the XLM blockchain for its digital asset business. The speculation is tied to Tom Jessop, a Fidelity executive who used to run a promising blockchain startup by the name of Chain. The Chain project was recently acquired by the Stellar Development Corporation. Following the merger, the Stellar Development Corporation re-branded as Interstellar.

From an institutional standpoint, Fidelity is considered an early adopter of cryptocurrency. The asset manager has been mining cryptocurrency for the past four years and recently announced plans to develop a new suite of blockchain-focused products.

Stellar has been subject to other positive speculation in recent months as large corporations seek entry into the blockchain arena. In August, Business Insider speculated that Facebook was eyeing a potential partnership with Stellar. Although Facebook denied the rumors, there’s strong reason to believe that the social media network will soon enter the blockchain arena, which makes Stellar a prime candidate for adoption.

Last month, IBM announced it had officially launched its new money transfer business on the Stellar protocol in a move that could springboard digital currency adoption across the globe. IBM Blockchain World Wire, as the system is known, utilizes Stellar to settle cross-border transactions in a matter of seconds.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Altcoins

Ravencoin (RVN) Arrives With 118% Weekly Growth Ahead of Mainnet Launch

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Ravencoin (RVN) made its entry into the market cap top one-hundred on Sunday, propelled by a Binance listing, and 118% sustained growth over the course of the week.

Trade volumes for the asset-creation coin hit all-time highs on Thursday, rising an incredible 23,000% from $212,000 to $49 million within the space of ten days.

Ravencoin has been around since 2017, and the upcoming mainnet launch on October 31st marks the one year anniversary of the coin’s creation. It also marks the ten year anniversary of the release of the Bitcoin whitepaper by Satoshi Nakamoto.

RVN Rising

Ravencoin was going relatively unnoticed until it gained a Binance listing on October 11th. As you can see from the chart below, the Binance listing completely changed the coin’s fortunes.

Indeed, if we look at the source of today’s $49 million worth of trades we see that Binance has housed just under 85% of the total.

In the past week the coin rose 118% in value, climbing from $0.017300 up to Sunday’s peak of $0.037732. Since the date of the Binance listing the coin is up 172% in value, and finds itself among the market cap top-eighty.

What Is Ravencoin?

The Ravencoin protocol is open-source and available to the public, and focuses on the creation of digital assets on its Proof-of-Work (PoW) blockchain.

The blockchain itself is secured by sixteen different hashing algorithms, all of which are rotated on a non-patterned basis. The algorithm changes depending on the final digits in the preceding block hash, making it impossible to predict by ASIC mining machines.

As stated in the initial release notes last year:

“The core developers are currently focused on building the asset layer which will allow Ravencoin to facilitate the transfer of assets.  There is a hard-fork planned for the network to implement this additional asset layer in around October/November 2018 time frame.”

The devs appear to have held true to that time frame, and the mainnet upgrade is expected to go ahead as planned on October 31st.

The release notes state that no premine was used, nor are there any developer rewards. The blockchain is intended to be a Bitcoin for digital asset creation, and according to the official documentation:

“Assets can come in a variety of types, such as financial instruments such as security tokens/stocks/bonds/deeds/etc as well as gaming items (ex. a sword)/conventional asset management/managing  distributions for co-ops/digital art. There are a lot of real-world applications that this blockchain is intended to disrupt and improve.”

More can be read about the coin’s unique hashing algorithm, known as X16R, in the dedicated whitepaper provided in the Ravencoin release.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 82 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Altcoins

Minor Bounce Lifts Crypto Market Cap Above $211 Billion; Tether Circulation Plummets

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Crypto prices traded modestly higher on Sunday, as bitcoin regained its footing above $6,500 and major altcoins avoided further losses.

Market Update

The cryptocurrency market capitalization on Sunday peaked at $212 billion, the highest in five days. At the time of writing, the market was valued at $211.5 billion.

Most assets ranked in the top-20 had reported minor gains over the last 24 hours, a period marked by lower trade volumes. The bitcoin price has returned above $6,500 on trade volumes of just $3.2 billion. The leading digital currency continues to trade at a premium on Bitfinex.

Meanwhile, Ethereum rose half a percent to $206. XRP also climbed 0.5% to $0.459. Bitcoin cash was last seen trading above $449 for a gain of 1.6%.

Stellar XLM was the only top-ten coin not to report gains at the time of writing. However, the no. 6 coin by market cap has returned more than 13% over the past week, far outpacing the broader market.

Trade volumes have declined steadily over the past week, as markets re-balanced following a sudden spike on Oct. 15. Digital exchange volumes have fallen to $9.7 billion on Sunday, according to CoinMarketCap.

Tether Market Cap Plunges

Since the start of October, Tether has pulled more than $600 million worth of USDT out of circulation, leading to a sharp drop in the stablecoin’s market cap. Cryptocurrency exchange Bitfinex, which is run by the same executive in charge of Tether Limited, appears to be leading in the offload of USDT tokens. As CCN recently reported, Bitfinex has initiated six transfers of USDT funds to the Tether Treasury this month. The latest transfer was initiated on Wednesday when Bitfinex sent 50 million USDT to the Treasury.

Most of the outflows from Bitfinex occurred long before USDT lost its peg to the dollar in a single-day crash on Oct. 15. USDT briefly fell below $0.90 that day before quickly recovering around $0.94. Currently, one USDT is equivalent to $0.984 U.S., according to CoinMarketCap. Some exchanges are quoting USDT as low as $0.96 on Sunday.

The sudden decline in Tether’s circulation comes at a time when the company is facing heightened scrutiny over its dollar-backed reserves. An influx of alternative stablecoins offering greater transparency and regulatory oversight may also be undercutting demand for USDT.

Case in point: the Gemini Exchange’s GUSD stablecoin reached a high of $1.19 on Tuesday before settling around parity against the dollar. Unlike USDT, the Gemini Dollar has obtained regulatory approval from the New York Department of Financial Services. On the opposite side of the spectrum, Tether has been subpoenaed by federal regulators over its connection with Bitfinex and failure to prove its dollar reserves.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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