CFTC Pump-N-Dump Crypto Bounty: Expose The Scam Rewards?
The United States Commodity Futures Trading Commission (CFTC) is warning crypto investors to stay away from pump-and-dump schemes. Through a 2-page ‘Customer Advisory’ addressed to the “customers,” the regulator’s first warning is stern and even details previous examples on the same.
New Technology, But The Same Old Scam It Seems
Erica Elliott Richardson, the Director of Public Affairs at CFTC explained that these types of fraudulent activity were not new as they only evolved as a result of technology. They thrive through fake hype created and spread using anonymously organized mobile internet message boards and social media where they manage to pass their devious intentions across.
The agency acknowledged that though such kinds of schemes have been around, the current ones are marketed as “alternative” coins and tokens with a potential to shoot in value. According to the CFTC, this scam emerged as “boiler room” frauds in the past when stockbrokers used to dupe the unsuspecting. They would use such gimmicks as “companies were on the verge of breakthroughs, releasing groundbreaking products.”
Currently, these pump-and-dumps use false news reports that revolve around “famous high-tech business leaders or investors” who reportedly express interest in pouring millions of dollars. After the notable investor makes it public, the value of the little-known token suddenly shoots. Another tricky way entails using a major bank, retailer or credit card firm announcing a planned partnership with the upcoming virtual currency.
From the onset, the scam’s value is just dramatic. The rise in value peaks before suddenly dropping to mark the start of the dump. It’s basically like what the commission states, “The price falls, and victims are left with currency or tokens that are worth much less than what they expected.”
Whistle-Blowers Expose The Scam Earn A Bounty
In the light of this fraud, the CFCT has a bonus for those who can help uncover the scheme. It is calling upon anyone with valuable information that could lead to taming the scheming project and issue monetary sanctions worth $1 million to come forward. From the penalty, the whistle-blower will be entitled to between 10-30%.
CFTC Advice To Crypto Investors
Admitting that it is their role to maintain sanity by acting as an “anti-fraud and manipulation enforcement authority,” the CFCT acknowledged having received complaints from victims of the vice. The Commission advises prospective investors against believing in ads and websites that promise quick riches as well as buying tokens based on tips from social media. It, however, emphasizes that in the end, it is upon the customer to purchase digital currencies or tokens based on the social media marketing gimmicks.