ASIC warns on pump and dump schemes
ASIC recently put a media release out warning about the horrors of ‘pump and dump’ schemes trending via social media platforms, catching retail investors unawares of some hidden agendas held by malicious actors - A sense of excitement is created around a stock through social channels about prospects in a particular company and before they know any better, the posters have sold their shares and the remaining shareholders are left with a falling stock price.
The warning is pretty clear “Market manipulation is illegal. It can attract a fine of over $1 million and up to 15 years imprisonment. ASIC takes breaches of the market manipulation provisions seriously.”, the media release reads.
Similar correlations can be made in the crypto sphere to the rise in ‘pump and dumps’. Professor Eswar Prasad, a Cornell University economist recently told the BBC “ pump and dump schemes are rampant in the crypto world, with investors often jumping in with eyes wide open, perhaps hoping that they can ride the wave and dump their holdings for a quick profit before prices collapse”.
At the beginning of November, the highly discussed ‘Squid Game’ token, riding of the success of the popular South Korean Netflix series of the same name (but of no affiliation) left coin holders stunned by a sudden “rug pull”, seeing the coin developers walk away with over $3.38m. Jumping from $0.01 to $2,856 in just under a week, holders were left stranded with no option to sell the token after purchase while the coin crashed back to $0.0053.
To mirror the warning of ASIC, always be on the looking for malicious actors.