Inflating prices through Pump and Dump schemes isn’t new to the stock markets; the unregulated and anonymous nature of cryptocurrencies makes it easier for scammers to manipulate stock prices.
NEM (XEM) President Lon Wong believes price manipulation is unavoidable in cryptocurrency markets saying:
“Price manipulation is not something new. You see it in mainstream markets as well. We are in a very nascent, growing phase of our industry and these things are unavoidable,”
Cyber attackers had recently stolen $530 million of NEM coins from the Japanese exchange.
It Isn’t Difficult To Manipulate Price
Though regulators are showing concerns on the illegal use of digital currencies – they are also blaming price manipulation activities and pump and dump schemes for the considerable price volatility.
The most prominent example of this is the Tether and Bitfenix related controversy. Bitcoin price lost half of its value last month when traders blamed Tether and Bitfinex for artificially propping up bitcoin prices; millions of dollars of Tether was created to buy Bitcoin on the Bitfinex exchange, helping push their prices up.
U.S. Regulator Warns of Over ‘Pump-and-Dump’ Schemes
The Commodities Futures Trading Commission (CFTC) warned investors of the pump and dump schemes; the regulatory authority suggested that investors avoid investing in virtual currencies based on social media adds and tips.
CFTC director of public affairs Erica Elliott Richardson said: “As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets.“
Erica Elliott stressed on the need for anti-fraud and manipulation enforcement authority to cover digital currency exchanges. Erica announced expanding CFTC’s reach towards cryptocurrency markets.
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