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CFTC Offers $100,000 Bounty to Crypto Pump-and-Dump Whistleblowers
The US Commodity Futures Trading Commission (CFTC) has created a bounty to encourage whistleblowers coming forward in exposing “pump-and-dump” schemes. “Customers should not purchase virtual currencies, digital coins,” the CFTC warned, “or tokens based on social media tips or sudden price spikes. Thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts.”
Also read: Citibank India Bans Bitcoin
To eat at scammers’ anonymity at least, the CFTC is offering, “If you have original information that leads to a successful enforcement action that leads to monetary sanctions of $1 million or more, you could be eligible for a monetary award of between 10 percent and 30 percent.”
Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes is a two-page effort from the CFTC, “advising customers to avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies and digital coins or tokens.”
As these pages have long documented, scams and schemes of old are reappearing anew in a space filled with inexperienced investors. For those familiar with, say, the American stock market experience, boiler room cold calls of yore, penny stocks, hot tips, and sure things are all haunting phrases investors have encountered at one time or another.
The ubiquity of message boards and of stock trading websites only encouraged scammers in this regard. Price action moved on pumps, on posts and general chatter about the potential of a given stock only a few were privy. Greed did the rest. Regulatory bodies in the US have had enough time to see their likes come and go.
Old Wine, New Bottle
And while such scams seem new under the cloak of hip lingo such as cryptocurrency and blockchain and disruptive and game changer, it’s all pretty much the same old dance. Indeed, “Pump-and-dump schemes have been around long before virtual currencies and digital tokens. Historically, they were the domain of ‘boiler room’ frauds that aggressively peddled penny stocks by falsely promising the companies were on the verge of major breakthroughs, releasing groundbreaking products, or merging with blue chip competitors.”
The artifice of demand, such as it was, reflected in the price. “When the prices reached a certain point, the boiler rooms would dump their remaining shares on the open market, the prices would crash, and investors were left holding nearly worthless stock.” What might be slightly different in our present era is the relative sophistication and ability to hide true identities. And with basically one click, thousands of people can be reached rather easily.
For the broader ecosystem, self-regulation often happens in the form of news, Youtubers, message boards, and generally works itself out. Some enthusiasts insist it’s crypto’s charm, the engine of innovation, to police itself with heavy doses of caveat emptor. Part of the problem with accepting rat traps of the government regulatory body variety is what’s being invited. Running to Big Brother empowers Big Brother, a concept easily missed in the heat of pursuing justice. Often such bounties are used as metrics to buttress future enforcement budgets and to encourage more activist legislation. But these too are lessons this brave new world must learn anew.
What do you think about the CFTC bounty? Let us know in the comments section below.
Images courtesy of Pixabay, CFTC
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The post CFTC Offers $100,000 Bounty to Crypto Pump-and-Dump Whistleblowers appeared first on Bitcoin News.
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