
How traders 'pump and dump' cryptocurrencies - bradvl
http://uk.businessinsider.com/how-traders-pump-and-dump-cryptocurrencies-2017-11
======
jeremyt
This article is complete bullshit.

I'm a member of this group, only because I was added without my consent, which
is probably the case for most of the users in the group.

Just for giggles, I watched them do a pump and dump one time, and they
basically sold the pump hard, managed to get about 10 Bitcoin in some tiny
market cap coin, and then one guy sold all the way back down and left the
"members" of the group holding the bag.

This group is a scam, but not in the way that this article says.

Also, telegram isn't encrypted as far as I know.

~~~
jcoffland
Telegram's key feature is encryption.
[https://telegram.org](https://telegram.org)

~~~
neuralzen
Only on phones, there is no option to encrypt on desktop.

~~~
jcoffland
According to their website all data is encrypted. From what I understand it's
transparent and does not require enabling via an option.

~~~
krrrh
This is a longstanding issue with Telegram, and deceptive advertising that a
lot of people have an issue with. They use client-server encryption sure, but
unlike Signal or WhatsApp, they do not employ end-to-end encryption by
default; you must enable it for two person chats, and it is not available for
group chats. Unless something has changed, you get full chat history when you
log in from a new device or are invited to a pre-existing group, meaning that
the chat history is stored on their servers, and if not in plain text it can
be unencrypted for new group members or devices.

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vim_wannabe
Sounds more like whale/s telling people to raise the price of a coin then
dumping on them, rather than some kind of a 'collaborative' pump.

The article is talking about minutes after all so there's likely no outside
buyers fast enough to react. Essentially most 'members of the community' will
lose, but some lucky ones will be fast enough to dump before the whale for at
least some cash.

~~~
KVFinn
>The article is talking about minutes after all so there's likely no outside
buyers fast enough to react.

The article doesn't talk about it, but there are campaigns organized over days
and weeks to talk up a coin. It's not all about minute timescales.

~~~
mancerayder
Do you have evidence of these?

Don't get me wrong, I believe you, but convincing evidence, even anecdotal,
would be useful.

Of the big coins, not the hundreds of random ones with "To The Moon" Reddit
comments.

~~~
KVFinn
>Of the big coins, not the hundreds of random ones with "To The Moon" Reddit
comments.

In terms of personal experience, I've not seen anything as explicit as this
article. And nothing with a giant market cap coin. More like a gray area
between pump and dump and a bunch of over enthusiastic marketers.

Like I'll be reading a forum and notice a ton of people hyping up a small
market cap coin. Check their post histories and they are generally new or
they've only talked about the coin. Eventually find the slack/discord for the
coin, people are posting links to forums/threads/mentions of the coin in the
discord, and people are organizing shifts to give support. The comments are
all purportedly coming from a genuine place (and to an extend they may be) but
they were posted as if they were just random people stumbling across this
discussion -- not an organized group explicitly trying to spread the good
word.

~~~
Gargoyle
Pump'n'Dump of that sort for small coins has been going on since literally the
beginning of altcoins. I'm not in the altcoin arena now, but I assume it's the
same as it was.

Really, there wasn't much different between that era and the yahoo penny stock
boards of the late 90s.

Learning to detect and filter that noise is a crucial skill if you're gonna
trade those things.

~~~
ecommerceguy
"Really, there wasn't much different between that era and the yahoo penny
stock boards of the late 90s."

I came here to say exactly this. Coins are extremely similar in nature to pink
sheets. Bitcoinforums et al are the new yahoo finance forums. Full of shills
and pumpers, be very VERY wary.

I was doing "research" this weekend for some long tail alts I could ride the
pump on next. I couldn't help but note the number of template Diva Wordpress
sites out there, all using the exact same template just with different fonts
and minor style changes. All have some bullshit "whitepaper" (overused term of
the year). Then I thought this can't be that hard to start my own. So, I am.
Hopefully I'll pump my own coin within the next few weeks. I've noted a few
criteria that I'm sure will attract some gamblers/fools.

On a side note, the eBay market for mining rigs and accessories is stunningly
healthy.

~~~
amigoingtodie
I am interested in the criteria you have identified.

Would you be willing to discuss this further? I have some silly ideas.

------
Itsdijital
How traders pump and dump sub 50 btc volume coins is a more accurate title.

Manipulating a coin with 1k+ volume is significantly harder.

~~~
godelski
I've been hearing talk about 1k people own >40% of BTC[1]. I think having that
kind of market share gives you that kind of power, especially if you
coordinate your moves (like the article suggests).

This article more seems like spammers. Same kind of thing that the stock
spammers did with emails. There's a nice DefCon video about this [2].
Basically some people have a lot of the stock (or coin), get people to buy,
and dump on them. I think the evidence that people have been doing this with
the smaller stock exchanges show that it can be done with BTC. I think if you
watch BTCs price long enough, you can even see these patterns.

[1] [https://www.bloomberg.com/news/articles/2017-12-08/the-
bitco...](https://www.bloomberg.com/news/articles/2017-12-08/the-bitcoin-
whales-1-000-people-who-own-40-percent-of-the-market)

[2]
[https://www.youtube.com/watch?v=ytDamqTjPwg](https://www.youtube.com/watch?v=ytDamqTjPwg)

~~~
VMG
> I've been hearing talk about 1k people own >40% of BTC[1].

That seems dubious. These numbers usually don't account for custodial wallets
e.g. exchanges

~~~
atmosx
"The Bitcoin system is the best known and most widely used alternative payment
scheme, but so far it was very difficult to get accurate information about how
it is used in practice. In this paper we describe a large number of
statistical properties of the Bitcoin transaction graph, which contains all
the transactions which were carried out by all the users until May 13th 2012.
We discovered that most of the minted bitcoins remain dormant in addresses
which had never participated in any outgoing transactions. We found out that
there is a huge number of tiny transactions which move only a small fraction
of a single bit- coin, but there are also hundreds of transactions which move
more than 50,000 bitcoins. We analyzed all these large transactions by
following in detail the way these sums were accumulated and the way they were
dispersed, and realized that almost all these large transactions were
descendants of a single transaction which was carried out in November 2010.
Finally, we noted that the subgraph which contains these large transactions
along with their neighborhood has many strange looking structures which could
be an attempt to conceal the existence and relationship between these
transactions, but such an attempt can be foiled by following the money trail
in a sufficiently persistent way." \- Dorit Ron and Adi Shamir

ref:
[https://eprint.iacr.org/2012/584.pdf](https://eprint.iacr.org/2012/584.pdf)

------
electic
I am on Telegram and none of these channels really have any bearing on pumping
a coin. There might be some movement on smaller coins but these channels
rarely play a major part.

Typically what happens, is a whale starts buying a particular currency and
magically you start to see news articles appear on major and smaller niche
crypto blogs. Then the reddit posts start appearing causing a even more
hurried frenzy to buy the coin. It is very similar to how traditional stocks
are pumped.

On a side note, I am noticing a trend from Forbes, Business Insider, and CBS
News that are very hostile to the crypto space. They will literally grasp at
any resemblance of shadyness to write a negative article.

~~~
autokad
feels like a fear and smear campaign to allow the government sweeping
authorities and regulations "for everyone's own good" that probably offer
little help to the problem the fear and smear campaign was calling out.

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m3kw9
Happening every day at the penny stock stalls in small doses, but in crypto
currency, these guys get off scott free with huge sums

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blcArmadillo
Is coordinated buying really considered pumping? Don't you also have to
distribute misleading information?

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cowpig
I have a feeling these businessinsider articles are actually coming from the
pump and dump groups' press kits.

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thisisit
Oh, this brings back memories. Back in 2013/2014 when bitcoin first touched
1k, I got to know some of these groups.

First, there are positive campaigns run for multiple coins through YT channels
(some really respected ones), reddit posts, bitcointalk forum etc. Once enough
frenzy is generated a pump date is announced but not the coin name. The coin
name depends on various factors like -how many coins these guys have
accumulated, which coin is generating some vibe outside their efforts, how
much of the supply has been mined etc.

Once the time arrives, the coin name is announced in the chat group, twitter
etc. And the coin price flies on a particular exchange. It seems obvious that
the price should tank. But it doesn't. Because there are a lot of things going
on here:

a. In the cryptocurrency world, everyone has a constant FOMO fever. So, if
they see a coin flying they buy irrespective.

b. Then there is lot of belief in technical analysis too. So, if there is some
MA crossover, RSI crossever etc happens then people buy irrespective.

c. There are a lot of "arbitragers" who have automated setups to try and catch
up the difference. So they sell at the high price exchange and buy at low
price exchange. But, the imperfect market ensures that they actually end up
pulling the price at the lower exchange. The price does drop but it doesn't go
to the previous low price.

d. Lastly and most importantly the orderbook gets messed up and price is re-
framed.

These coins are thinly traded. So, there is some form of equilibrium at the
low price - there are both buyers and sellers at this price. Once the pump is
over the price has inched higher. The bag holders have bought the coins at a
higher price so they wont sell for a loss. Then the FOMO, TA and arbs come in
to create an equilibrium market at the higher prices.

Things don't end there. The pump and dump schemers also are unable to get out
at the high so, they keep creating positive buzz for the coins. In most cases,
the same coin gets pumped up by many (or maybe same) groups multiple times.

Look at the chart for the Magi Coin mentioned in the article:

[https://coinmarketcap.com/currencies/magi/#charts](https://coinmarketcap.com/currencies/magi/#charts)

It is going higher and higher.

If you look at the market on bittrex, which btw is the go to market for these
schemes:

[https://bittrex.com/Market/Index?MarketName=BTC-
XMG](https://bittrex.com/Market/Index?MarketName=BTC-XMG)

you will find multiple price swings, which are actually prices being pumped.

Does it work for big coins? Yes it does. But, those are much more nuanced than
telling people to pump a coin. There it takes form of some announcement -
mostly it is a vaporware feature which remains WIP for a long time or some
collaboration.

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cyphunk
you had me at...

 _" Russian messaging app Telegram is heavily encrypted and,..."_

enough of the mccarthyism.

anyway, time to log off of my freedom infused american hacker news app and go
work for a bit in my almost fascist italian code editor on my communist
chinese computer

~~~
skinnymuch
It's not even really Russian. It's based in Germany. Pretty sure the founder
and his brother of VK fame haven't been back to Russia since Telegram was
created. Either are dual citizens or only have non-Russian passports now too.

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nkrisc
The current link anchors to the bottom of the page.

~~~
sctb
Thanks, we've removed that from the link.

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Timbaker
These days, iN KOREA, it is crazy!! Several days, it shows going down tread,
but in las weekend it goes up and upper! you guys, I want to ask you, how long
does this situation go?

