The scams used by the "Wolf of Wall Street" in stock markets have found their way into cryptocurrency markets. Business Insider/Samantha Lee/Paramount PicturesTraders artificially inflate the price of small cryptocurrencies with the hope of making a quick profit at the expense of other investors. Business Insider observed five apparent "pump and dumps" of coins in just a week, coordinated using the messaging app Telegram. See how they work here. The activity would be illegal in most markets, but regulators have yet to get to grips with cryptocurrency sector, which has exploded in size to $200 billion in 2017. Those who monitor the secondary market say "this sort of activity is rife" and "a real problem."
LONDON — Cryptocurrency exchanges are rife with "pump and dump" scams that would be illegal in most markets and leave unsuspecting investors at risk of large losses, a Business Insider investigation has found.
Crypto traders are using the secure messaging app Telegram to orchestrate the scams. Their strategy is to suddenly inflate the price of a cryptocurrency by coordinating a few buyers to act at specific times.
Then, after the price rises, they attract other, unwitting investors to buy into the price momentum. The "pumpers" quickly sell the coin to make a profit. The coins often crash just minutes after the initial surge, leaving the second wave of investors with losses.
Messages on the Telegram channel "PumpKings Community." Oscar Williams-Grut/Business Insider/Telegram
The same scam was most famously carried out in the stock market by the "Wolf of Wall Street," Jordan Belfort, the convicted securities fraudster whose e...