ASIC reveals how it infiltrated Telegram ‘pump and dump’ crypto groups

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The Australian Securities and Investments Commission (ASIC) revealed details of how it took down the ‘pump and dump’ crypto Telegram groups in October.

A pump and dump system typically involves the use of social media to coordinate users to purchase large amounts of a lightly traded token to artificially inflate its price. They then cash in massive gains after other investors, who do not participate in the program, FOMO engage in a dynamic transaction.

The new documents reveal that ASIC has been taking advice from financial scholar and crypto researcher, Talis Putnins since early October.

A 38-slide presentation from Putnins to ASIC investigators found that the pump and dump programs are cyclical, peaking in 2018 and again in 2021. The presentation said they tend to “be on” correlation with general market sentiment and prices “.

The pumping and emptying systems are cyclical, speaking in 2018 and again in 2021. Source: presentation to ASIC by Professor Talis Putnins

According to the presentation, a number of factors changed between 2018 and the time of publication, October 2021. Over a six-month period in 2018, Putnins documented more than 355 cases of crypto market manipulation.

He referred to the regimes’ “transparent intention to pump” and the lack of “any real attempt to revive the momentum”. The diagrams are “completely out in the open for everyone to see,” the presentation noted.

The presentation detailed the Telegram group’s “Crypto Binance Trading | Signals & Pumps »September 19 pump from the fractional algorithmic stablecoin system, Frax Share (FXS), which saw a massive 90% volume to $ 65 million in less than a minute.

The result of the Seven FXS pump was a 90% price increase in less than a minute. Source: presentation to ASIC by Professor Talis Putnins

“With our volumes averaging $ 40 million to $ 80 million per pump and peaks reaching 450%, we’re ready to announce our next big pump,” a Sept. 13 announcement said within the group.

“Our main goal for this pump will be to make sure that every member of our group makes a huge profit. We will also try to hit over $ 100 million in volume in the first few minutes with a very high% payout.

The presentation cited a perceived lack of legal risk, anonymity in forums and encryption as potential reasons for the groups, adding that there is a “perception that crypto is not regulated so pumps are legal” .

The new information came to light in documents the Australian newspaper was able to access through an access to information request. The Australian released the new information on December 28.

Last year, Putnins co-wrote an article titled “A New Wolf in Town?” Pumping and dumping manipulation in cryptocurrency markets.

The report concluded that the crypto pump and dumps created “extreme price distortions of 65% on average, abnormal transaction volumes of several million dollars, and large transfers of wealth between participants.”

Related: ASIC Targets Pump and Dump Telegram Groups

On October 15, Cointelegraph reported that ASIC had investigated schemes in crypto and traditional markets operated through social channels such as Twitter, Telegram and the Australian equity discussion forum, HotCopper.

At the time, a Telegram account named “ASIC” posted a message on the “ASX Pump Organization” chat alerting its 300 members that the watchdog “was monitoring this platform” and that its members were subject to investigation.

“The coordinated pumping of stocks for profit may be illegal. We can see all the trades and have access to the identities of the traders. […] You run the risk of having a criminal record, including fines of over $ 1 million and jail time. Screenshot of an ASX Pump Organization Telegram chat ad from ASIC. Source: presentation to ASIC by Professor Talis Putnins

An ASIC spokesperson told Cointelegraph at the time: “Even when the activity involves cryptocurrencies / products that may not be financial products under the Corporations Act, the practice of pumping and dump is of concern as it can result in losses for investors and create price volatility.

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