The Commodity Futures Trading Commission issued a warning related to cryptocurrency pump-and-dump schemes.Earlier this month, CFTC had put out an advisory that advised caution around investing in crypto retirement accounts.Other regulators, mainly the SEC, have also sounded the warning on pump-and-dump plans, especially around initial coin offerings.
The latest advisory emphasizes in part on a major avenue for cryptocurrency promotion on social media. It’s a major topic, provided that major social media platforms have moved to stop advertisements for ICOs and cryptocurrencies amid a sequence of such marketing pushes. The CFTC stated that investors should perform their research before possibly purchasing a cryptocurrency.
Consumers should not buy virtual currencies, tokens or digital coins depending on social media tips or abrupt price spikes. Meticulously research virtual currencies, tokens, digital coins and the entities or companies behind them in attempt to separate hype from facts.
Stating the environment as old scam, new technology, the agency warned that same basic scam is now occurring using unpopular virtual currencies and digital tokens or coins.The agency also stated some of the processes by which the pump groups influence members to drive prices, at times to the advantage of the organizers themselves.
The Commodity Futures Trading Commission mentioned that some pump and dumps consume false news reports, usually about a renowned high-tech business pioneer or investor who intends to pour extensive capital into a small, lesser famous virtual currency or coin. Other false news stories have showcased major banks, retailers or credit card firms, reporting plans to associate with one virtual currency or another.
The CFTC also suggested that it could seek enforcement initiatives against those who run such groups. While its controlling oversight right over commodity cash markets is confined, the CFTC keeps general manipulation and anti-fraud enforcement right over virtual currency cash segments as a commodity in interstate business.