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Pump and Dump: How Online groups manipulate legally to the Bitcoin market

Pump and Dump: If the Bitcoin price rises, not far is the search for reasons. How on the regulated stock market is also correlated to Changes on the crypto-mark

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Pump and Dump: How Online groups manipulate legally to the Bitcoin market

Pump and Dump: If the Bitcoin price rises, not far is the search for reasons. How on the regulated stock market is also correlated to Changes on the crypto-market, often with messages of the company. Technical and fundamental analysis help here to get an Overview of the entire market situation. And yet there is in the Bitcoin Ecosystem is a big difference: Pump-and-Dump-groups.

By Phillip Horch
28. May 2019BTC$8.636,00 -1.79%part Facebook Twitter LinkedIn xing mail

Between the 26. and 27. May, the Bitcoin has increased-rate significantly. Within an hour, the rating of the largest crypto-currency jumped to a market capitalisation of just under US $ 500 in the height. As we explain here, for a number of reasons. Both the technical and the fundamental analysis of the market situation can help the situation in the crypto market to assess. While the Bitcoin Ecosystem is waiting on the Mainstream adaptation, so the rush of the masses to prevail, however, in the Background of some of the actors, the events take advantage of the Bitcoin exchange rate. In the process, they enrich themselves in so-called Pump-and-Dump-groups.

Disclaimer: this Text offers neither legal advice, nor does it encourage investment in crypto-currencies, or Pump-and-Dump systems. Also if in Search for the utmost care has been taken, can be given for the completeness and accuracy of the information, no warranty. A response to a request from the German Federal financial Supervisory authority (BaFin) has yet to be assessed.

Pump and Dump Definition

A Definition of Pump and Dump groups we already provide here:

In the case of a Pump and Dump is about to engage in a course of conscious and coordinated way to the top ("to pump" = inflate, bloat), to dispose of the Asset immediately after Reaching the Maximum level with a significant profit ("dump" = to throw away, dump). Pump-and-Dump-schemes are significantly older than Bitcoin & co., fall in the crypto-Space, however, on particularly fertile ground. And, although first and foremost, the initiators of the Pumps and the Dumps benefit.

Thus, investors meet online to generate common profits. You put it in the "afraid to miss something" will be triggered. (Also known as FOMO: F ear o f M issing O ut). To date, there are dedicated groups in Messaging services like Telegram. To be able to the Schema to better understand, track, we here a current case.

The price of Bitcoin rises: What happens in the Background

In the Telegram group "Big" Pump "Signal" of the initiators of currently the largest Pump-and-Dump group (over 40,000 subscribers) already on 14. May, the next action is announced.

There it is:

dear members,

As you have probably all noticed, there is a rise in the Bitcoin [course] in the last time. [...] This means that there is currently plenty of space for a sensational Pump in this Moment. If the sentiment remains so, we will conduct one of the largest Pumps made by this group ever. There are a lot of Investment groups around the world, tracking every movement of the Altcoins. We can use that to our advantage, and a single Coin as pumps, as we have done in the past. The Details are as follows: Binance date: 19. May 2019, 21 GMT. [Note: The group corrected the date a short time later on the 26. May].

In the time between the announcement of the Pumps and the current implementation of the initiators remind the members at regular intervals that the date of the Pumps is getting closer. They try to bring in the spirit of a snowball or pyramid system, the members, more and more members add to the group.

[It is announced] a new Pump. Begins to enlarge the group in order to achieve an even greater Pump and to create a temporal advantage for [next action]!

Finally, it comes to the notice of the concerned tokens:

The Coin is: POA (POA Network) [...] of The Coin has massive Potential.

As you can see in the price history of the affected tokens, the share price rose directly with the announcement of the strong:

The price rose so within a few minutes of 0,033108 US Dollar by about 60 percent to 0,053167 US Dollar. The total market capitalization increased by nearly four million dollars.

the efficiency of Pump-and-Dump-groups

As you can see in the current example, Pump-and-Dump groups are a good way to collect, within a very short period of a lot of money – if you're quick enough. However, and this is the crux of the matter is: most of the time, the initiators of the group benefit. Who is too slow, and the Dump is not fast enough to be sold, will generally make a loss. Finally, the scheme aims ignorant to convince outside investors of the possibility of a quick profit. This is a classic pyramid scheme, which – at least within the groups – all members more or less consciously.

Legal Status of Pump-and-Dump groups in Bitcoin & co.

While Pump-and-Dumps on the regulated stock exchange, according to the BaFin under the manipulation of the market and thus are forbidden, seems to be this law in the case of crypto-currencies (to pick). This is currently mainly due to the lack of regulation.

Here, you may in the judgment of the chamber court of Berlin, from October 2018 to remember. Due to a lack of official classification of Bitcoin and other crypto-currencies, the authority has found to be a measure of the regulatory authority, BaFin, is not acceptable. There it is:

The draft law, to be no evidence, however, to see that so-called crypto-currencies under the concept of the unit of account should be covered. This is due to the fact understandable that, for example, the physical Bitcoin is only in 2008/2009 for the first time on the Internet mention (see Frase, BB 2016, 26). Therefore, the legislator Bitcoin could not include in his consideration. The wording of the Law, no one interpretation is available, according to which only after the adoption of the law which have surfaced Bitcoin would be under the concept of unit of account subsumierbar. Considered alone, the adoption of a unit of account within the meaning of § 1 Abs would be to that extent. 11 sentence 1 of the KWG.

So it was, above all, a uniform recognition and Definition, the lack of currencies, both for Bitcoin and other Crypto:

in order for the Bitcoin to a General recognition and the corresponding foreseeable value of resistance, which allows him to the General comparability of different Goods or services to be used.

Since to date there is not a more recent judgment, it is assumed that the verdict of the chamber court of Berlin has stock. Without clear regulation, there is therefore no prohibition of Pump-and-Dump systems, in the case of crypto-currencies. A response to a press inquiry on the part of the BaFin has yet to be assessed.

Benjamin cherry of the law firm of Winheller ECHO confirmed to BTC, however:

insider trading and market manipulation are prohibited acts under the European market abuse regulation (MMVO). The Definition of financial instruments in the MMVO captured but with no crypto-currencies. The prohibitions and the specific offences in the securities trading act are actually not relevant. However, just Pump-and-Dump schemes can constitute an ordinary fraud, for the prosecution, then the Prosecutor's office is responsible. In my view it would be superior to, to take crypto-currencies to the MMVO. Thus, operations such as insider trading and other manipulations by the German Federal Institute for financial services could be investigated and monitored. The authority would also have the right to intervene early to prevent damage to investors

avert Up so there is a uniform regulation, the Profit from Pump and Dump, quite apart from moral questions, in certain cases, legal.

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