From pump and dump groups to insiders trading on esoteric knowledge, market manipulation is rampant within the cryptocurrency space. While some of it is illegal, most of the activity is either legal or quasi-legal, falling into the sea of grey that separates lawful land from unlawful territory. Everyone knows that market manipulation is endemic. The question is, does anyone care?
Also read: Warren Buffett: Bitcoin is Gambling, a Game, Not an Investment
In the Beginning, There Was Fontas
Traders have been manipulating the cryptocurrency markets since day one. In bitcoin’s earliest days, it and the altcoins that existed on a handful of illiquid exchanges were ripe for pumping, dumping, and then pumping again. Coins were won or lost in a heartbeat which, back then, were worth buttons. In hindsight, traders should have just hodled, as those $1 litecoins proved to be worth a whole lot more five years down the line (feathercoin and terracoin not so much).
One trader whose pseudonym was synonymous with pump and dumps back in 2014 was Fontas. Often these schemes would be orchestrated through the trollbox on Btc-e, an exchange whose attitude to illegal activity was laissez-faire to say the least. No one knows how much BTC Fontas made from preying on noobs who arrived late to the pumps he orchestrated with the promise of dropping “1 BTC buy bombs” to keep the green candle rising.
Phase II: Private Pumps
As the cryptocurrency markets started to mature, manipulation didn’t go away: it just went private, moving from public chatboxes to invite only Slack, Discord, and Telegram groups. The objective was still the same though: to buy cheap, force the coin to pump (now by spreading fake news about partnerships and other bullish signals) and then dumping at
