The Securities and Exchange Commission has charged two companies and four individuals with illegally profiting from pump-and-dump schemes involving three different digital assets or cryptocurrencies.
What is a pump-and-dump scheme?
A pump-and-dump scheme is when a group of people artificially inflate the price of a cryptocurrency by buying it in large quantities, then selling it off at a much higher price. This is often done by spreading false or misleading information about the crypto in order to get more people to buy it, then selling it before the price falls again.
These types of schemes are illegal in many countries and can result in heavy fines and even jail time for those involved. However, they are still fairly common in the crypto world, and many people have lost a lot of money by getting caught up in one.
If you’re thinking about investing in a cryptocurrency, be sure to do your research first and never invest more than you can afford to lose.
Who was charged?
Two companies and four individuals have been charged with running pump-and-dump schemes related to cryptocurrencies. The defendants are accused of artificially inflating the prices of certain digital assets, then selling them off at a profit.
This is not the first time that those involved in the cryptocurrency space have been accused of such activities. In fact, pump-and-dump schemes are relatively common in the world of digital assets.
The defendants in this case face serious penalties if they are convicted. This just goes to show that even in the Wild West of cryptocurrencies, there are still rules and regulations that must be followed.
What cryptocurrencies were involved?
Two companies and four individuals have been charged with pump-and-dump schemes related to cryptocurrencies. The cryptocurrencies involved were Bitcoin, Ethereum, and Litecoin.
How do pump-and-dump schemes work?
Pump-and-dump schemes are a type of securities fraud that involve artificially inflating the price of an asset through false or misleading statements, in order to sell the asset at a higher price.
These schemes are often perpetrated by a group of individuals working together to coordinate their buying and selling in order to create the illusion of market demand. Once the price is artificially inflated, the group members sell their assets at a profit, while leaving investors with worthless securities.
Pump-and-dump schemes are illegal and can be punishable by fines and jail time. If you suspect that you are being offered an opportunity to participate in a pump-and-dump scheme, you should contact the Securities and Exchange Commission.
Why are pump-and-dump schemes illegal?
Pump-and-dump schemes are illegal because they involve manipulating the market for a security for personal gain. This manipulation creates an artificial price increase for the security, which benefits the individuals involved in the scheme at the expense of everyone else.
Pump-and-dump schemes are often perpetrated by groups of people, rather than individuals. This is because it takes coordination to successfully manipulate the market. The people involved will often use social media and other forms of communication to spread false or misleading information about a cryptocurrency in order to pump up its price.
Once the price has been artificially inflated, the individuals involved will sell their holdings and cash in on their profits. This selling activity causes the price of the security to crash, leaving everyone else who bought at the higher price out of pocket.
Pump-and-dump schemes are illegal because they are deceptive and unfair. They harm innocent investors and damage confidence in the financial markets. If you suspect that a pump-and-dump scheme is taking place, you should report it to the proper authorities.
What are the consequences of involvement in a pump-and-dump scheme?
If you are caught participating in a pump-and-dump scheme, the consequences can be severe. You may be fined and/or jailed for your involvement. In addition, your reputation will be tarnished and it will be difficult to re-enter the cryptocurrency market.