Has YoBit Gone Crazy? Exchange Surprises Clients With Promises of Random Coin Pumps
A new announced from the Twitter profile of YoBit has left some investors worried. According to the company, YoBit Pump, which will start tomorrow, October 11, will see the company buy one random coin from the crypto space for 1 BTC every one or two minutes 10 times, spending 10 BTC.
Why would any exchange in the world do this? This campaign is a classic pump and dump scheme. Basically, you buy (mostly worthless) tokens at a ridiculous price to create acute artificial price surges.
YoBit Pump in 22 hrs: https://t.co/RIbW7OhKzM
We will buy one random coin for 1 btc every 1-2 mins 10 times (total buy amount – 10 btc).
— Yobit.Net (@YobitExchange) October 10, 2018
The YoBit Pump
The newly announced campaign has a very clear goal, to create a series of pump and dump schemes that will artificially inflate the price of the tokens “randomly chosen” by the company (more on the randomness later).
Pump and dump, according to the Investopedia, is a way to inflate stock prices based on false and misleading statements. However, it can also be done by using an “established position in the company's stock, sell their positions after the hype has led to a higher share price”, which is basically what the company is doing by using its power and influence to inflate prices.
This practice is, obviously, illegal in many countries, including the United States.
YoBit Has Its History Of Similar Problems
This is far from the first time that this exchange has done similar things. In June 2016, YoBit was called out by the team of the Waves Platform for a premature launch of the WAVES/BTC trading pair. Later, in February 2017, the Russian government blocked access to the exchange over concerns of fraud and a very problematic use of data.
Even the U. S. Department of Justice and the U. S. Commodity Futures Trading Commission (CFTC) have already launched investigations on YoBit, which is also a good hint of how the exchange has a history of being manipulative in the market.
Maybe Not A Great Idea?
YoBit’s move is clearly damaging for the whole cryptocurrency market, which already suffers a lot from bad actors as it is highly unregulated.
Even the Twitter followers of the company had a very negative reaction to the announcement. Some people stated that the company “couldn’t be serious” and that no exchange should even admit to this kind of stuff while others affirmed that YoBit simply managed to get the stick as the shadiest crypto exchange in the whole world. Others went as far as asking CoinMarketCap to simply delist the company as its behavior was not acceptable.
Another Twitter user has linked to the Pump and Dump 2018 Customer Advisory released by the CFTC and affirmed that this was an illegal move. This was the top tweet at the time of this report.
Matt Odell, co-host of the Rabbit Hole Recap, has also noted that announcing pump and dumps on Twitter for marketing purposes was “a first” and that the insiders know which coins they will pump, which hurts regulator scrutiny and retail users.
(1) I think this is a first. An exchange announcing a planned pump for marketing purposes.
(2) So many problems with this. The big one is insiders know which coins they will pump.
(3) Will draw increased regulator scrutiny.
(4) Will hurt retail users.
(5) Don't use Yobit. https://t.co/tfusb5R5r2
— Matt Odell (@matt_odell) October 10, 2018
This is, pretty much, the whole crux of the discussion here. As I’ve stated before, some people do know which coins will be pumped and dumped. This is illegal (if you believe the CFTC, if you don’t, well, that’s up to you) and this is bad for the whole industry. This is simply the shadiest level of market manipulation.
Matt Odell has told his Twitter followers not to use YoBit. Will you? There is plenty of money to be had, that’s for sure, every pump and dump scheme has, but if you want to risk, that’s on you. Avoiding pump and dump schemes is a good way to keep yourself clean and averse to risk while investing.
At least they're being honest about it? Unlike some other exchanges. 😂
— WhalePanda (@WhalePanda) October 10, 2018
Almost certainly, the #Yobit Twitter account was hacked.
If you have funds on Yobit be alert. Can’t tell you what to do but you should act with caution. https://t.co/yzpDoihH9H
— Bitcoin Bravado® (@BitcoinBravado) October 10, 2018
Is #Yobit for real??? I received an email from them saying that they will pump one random coin in 21 hours. Yeah which coin I wonder? A coin that the wallet is in maintenance? Or some scam coin? This is a joke right! 🤣🤣🤣🤣#Crypto #Exchange pic.twitter.com/waKaYaHLKH
— Vella (Real account from April 2016) (@cryptotrader85) October 10, 2018