Charlotte Waaijers

It is illegal with shares, but with crypto coins nobody can do anything about it: ‘pump-and-dump’ practices. In addition, a group of people tries to make money by manipulating the value of a coin and selling it for a profit. After that, the value collapses and the loss is ‘dumped’ on the buyers who got in last.

It has been known for several years that this is happening. Nevertheless, the Dutch regulator AFM, which monitors the financial markets, which include share trading, for example, says it still cannot do anything about it because crypto coins are not subject to AFM supervision. The European Commission is now examining whether this should change in Europe. France Cryptocurrency website is popular.

This kind of market manipulation, where organizers often know more than the rest of the market and deliberately spread misleading information, has been around for centuries. It is not new with crypto coins either. Several studies already appeared in 2018 showing that the ‘pumping and dumping’ of cryptos was widespread, especially in groups on the Discord and Telegram platforms.

Popularity seems to be on the rise

It seems that more groups like this have been popping up recently. “I didn’t research it, but I do see that the groups are showing up more often and getting more advertisements forwarded again,” said Josh Kamps of University College London. He is investigating fraud with crypto coins.

Why so many people are getting into bitcoin right now

This may have to do with the increased popularity of crypto coins, according to expert Peter Slagter, founder of the knowledge platform LekkerCryptisch. He sees that pumping and dumping mainly happen during periods when there are many consumers active in the market. The many links to groups are easy to find on social media.

According to Kamps, a possible explanation is also that the price of crypto coins has risen. “Then you see new people stepping in. The manipulations also come to the attention of the general public and thus become mainstream. They work best with inexperienced people, who are not yet very familiar with crypto coins.” Indonesia Crypto is popular.

This is how a pump and dump works

Here’s how the manipulation works: In Telegram and Discord groups, anonymous administrators announce the date and time when the ‘pump and dump’ will take place in advance, so participants can get ready. Only at the announced moment do the administrators announce which crypto coin everyone should buy.

The administrators then encourage everyone to promote the cryptocurrency on social media as much as possible, so that even more people invest in it and the price shoots up further. This allows first buyers to get rid of the coin for a much higher amount. And that is paid by the people who buy and sell just a few seconds later: they take the loss.

Below you can see how in a Telegram group with more than 150,000 members on April 21 at 11 p.m. the crypto coin Viacoin was pumped and dumped. Some of the members may be fake.

On the evening of April 21, Viacoin’s value skyrocketed by nearly 150 percent in a short space of time, trading for nearly 50 million euros between 11 p.m. and midnight. By way of comparison, the trading volume per day was about one million euros per day over the past week.

But even more striking: the price of Viacoin starts to rise a few minutes before 11 p.m. That suggests that some people have had inside information.

“These are really fraudulent organizations,” said Slagter. “There are people behind it who respond to it. They first buy themselves, without people realizing.” Often spread over a longer period, so as not to be noticed.

And it goes even further. “Then they are going to give a select group of people access, they call that ‘VIPs’. Sometimes there are whole layers of VIPs. They buy them in advance. To then report it to all followers.”

The people without foreknowledge buy the coin for a large amount and are left with it when the first buyers sell and the price collapses. Then nobody wants to buy the coin any more.

Here you can see how the price of Viacoin started to rise a little before 11 p.m. The peak time was around 11:09 pm. Within an hour the price was already below the old level.


The managers often choose cryptocurrencies with a relatively low value, which are not very much traded. This makes the value easier to manipulate.

Whether there will be supervision of the trade in crypto coins in Europe remains to be decided. The Dutch regulator cannot therefore intervene. The Netherlands Authority for the Financial Markets says it keeps an eye on developments and frequently warns against the risks of investing in cryptos. It is often unknown who the administrators and participants are and where they come from. “Cryptocurrencies exist worldwide and can be bought almost anywhere,” says Kamps. “The activities mainly take place in anonymous chat rooms. If a country starts making strict laws, people will go elsewhere to buy the crypto coins.”