The Commission on trade in commodity futures of the USA (Commodity Futures Trading Commission, CFTC) created a bounty program to encourage people to expose the scheme of “pump and dump”. “Customers don’t have to buy virtual currencies, digital coins, warns CFTC — or token-based advice on social networks or sudden price spikes. You need to carefully examine virtual currency, tokens and created their company with the organizations to separate hype from the facts“.
The award for the “pump and dump”
To detect fraud, the CFTC proposes: “If you have information, thanks to which you will have successfully taken enforcement action that led to monetary penalties in the amount of $1 million or more, you can receive a cash reward ranging from 10 to 30 percent“.
“Customer Advisory: Beware of Virtual Currency Pump-and-Dump Schemes” (Consultation clients: beware of schemes “pump and dump” virtual currencies) is a two-page document CFTC, “advising clients on how to avoid schemes “pump and dump” that can occur in a small or new alternative virtual currencies and digital coins or tokens“.
Old scams and schemes appear again in the field, filled with inexperienced investors. People familiar with the us stock market in particular penny stock, and old firms for the sale of unregistered securities by phone, sooner or later faced with a similar.
The availability of forums and websites stock trading only encouraged fraud. The price moved on the pump, the posts and the General discussion of the potential of a particular stock, which few people knew. Everything else is done with greed. The US regulators had plenty of time to see how to turn such schemes.
Old wine, new bottle
And under cover of buzz words “crypto currency” and “blockchain” hides the same old dance. That’s right: “Schemes “pump and dump” was long before virtual currencies and digital tokens. Historically, they had been an area of fraud “offices for the sale of unregistered securities over the phone” that aggressively traded penny stocks, falsely promising that companies are on the threshold of major breakthroughs, produce innovative products or merge with prestigious competitors“.
Artificial demand was reflected in price. “When prices reach a certain level, these offices were sold the remaining shares on the open market and prices fell, and investors were left with nearly worthless securities“. In our days has changed the relative sophistication of the schemes and the ability to conceal his identity. And almost one-click can easily reach thousands of people.
In a wider ecosystem self-regulation often occurs in the form of news, Youtube videos, forums and, in General, is triggered by itself. Some enthusiasts insist that in this all the charm of cryptocurrencies, the engine of innovation, protect yourself big purchasing responsibility. Partly a problem of acceptance of the “traps” of regulators is the proposal itself. Appeal to the Big brother Big brother is stronger, this concept is often overlooked in the heat of justice. Often such bounty programs are used as indicators to support the future budget of law enforcement agencies and enhance the legislation. But it is also the lessons that brave new world must learn from scratch.