Image Source
A study released on the 5th of August by the Wall Street Journal, it claims that the price of cryptocurrency was being manipulated by organised trading groups using apps like Telegram.
While presenting the results of research into cryptocurrency markets, the Wall Street Journal proposed that organised pump and dump schemes have seen traders crash and inflate the prices of various digital currencies this year.
Consequently, it says such groups are making hundreds of millions of dollars in profits for themselves, while others get hit by losses once the groups sell off a particular cryptocurrency en masse.
Trading groups made profits as high as $825 million In the first six months of this year alone.
The Wall Street Journal observed about 175 schemes trading 121 different crypto’s, they stated “[m]any more such groups exist, potentially adding millions or tens of millions more in activity,” adding that they “operate in private chat rooms, accessible only by invitation, generally managed by an anonymous moderator.”
An example of such trading group patterns, the Wall Street Journal takes Cloakcoin, an older altcoin that saw several pumps in price this year.
Shady trading groups
A sudden growth spurt occurred on the 1 of July on a famous cryptocurrency exchange Binance was as a result of a trading group called Big Pump Signal, the Wall Street Journal reported.
“Shortly after Big Pump Signal sent a message on Telegram to followers telling them to buy, the price of Cloakcoin hit the roof on Binance,” the research says.
“Prices of Binance's ten most-traded bitcoin pairs barely moved during the Cloakcoin pump.”
The research added a new dimension to market manipulation theories which have surrounded cryptocurrency markets in recent months.
For Bitcoin, various sources have claimed factors such as major whales like Mt. Gox and liquidation sell-offs have caused artificial price fluctuations since the all-time highs on December 2017, while others have claimed no such activities had affected the crypto markets in any way.
