• 16 hours Will Bezos Buy The Seattle Seahawks?
  • 23 hours 6 Tech Trends Transforming The Travel Industry
  • 2 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 2 days Trump Prepares For Another Key Tariff Decision
  • 2 days The Free Money Bubble Is About To Burst
  • 3 days The Crushing Reality Of Poverty In America
  • 3 days Should You Buy Into The World’s Largest IPO?
  • 3 days The Infinite Possibilities Of Cosmic Energy
  • 4 days Analysts Link Walking To Economic Growth
  • 5 days Will Japan Turn Its Back On The Aramco IPO?
  • 6 days Global Debt Soars To $188 Trillion
  • 6 days The World's Largest Gold Miners Are Getting Creative
  • 7 days Twitter: The Saudi Spy Tool To Bring Down Dissidents
  • 7 days Broad Commodity Funds Don’t Give Enough Exposure To Gold
  • 8 days Here We Go Again: Another Giant Telecoms Mega-Merger
  • 8 days World's Largest Gold Miner Sees Profits Triple
  • 9 days Microsoft Japan Trials 4 Day Work Weeks, Productivity Soars By 40%
  • 9 days Hedge Funds Lose $4 Billion In Four Days As California Wildfires Rage On
  • 10 days New Viral App May Be A National Security Threat In Disguise
  • 10 days China's $10 Trillion Space Play
Will Facebook’s Crypto ‘Libra’ Challenge Bitcoin?

Will Facebook’s Crypto ‘Libra’ Challenge Bitcoin?

Facebook has finally revealed its…

SEC Crackdown On ICOs Leads To New Lawsuits

SEC Crackdown On ICOs Leads To New Lawsuits

Crypto-related lawsuits are on the…

Stablecoins: The Next Trend In Cryptocurrencies

Stablecoins: The Next Trend In Cryptocurrencies

Coinbase announced that Circle's USD…

Crypto Insider

Crypto Insider

Cryptoinsider.com

Crypto Insider provides high-quality, long-form analytical pieces, investigative journalism, with less emphasis on breaking news. Our mission is to maintain high journalistic standards in the…

Contact Author

  1. Home
  2. Cryptocurrencies
  3. Alt-Coins

CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers

CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers

On February 15th, the US Commodity Futures Trading Commission (CFTC) issued an official directive warning customers to avoid cryptocurrency pump-and-dump schemes. More significantly, they are offering as much as 30% of the monetary sanctions recuperated from perpetrators as a direct result of whistleblower actions.

source: cftc.gov

WHAT IS A CRYPTO PUMP AND DUMP?

Cryptocurrency pump-and-dump schemes are commonly found on chat platforms such as Discord and Telegram. Large groups of users (2,000+) coordinate a targeted pump on thinly traded smaller market cap altcoins,. This leads to a window as small as 30 seconds for buyers to take profit. Nefarious tactics are often used, such as ringleaders in the operation pre-purchasing the coin to sell into their community’s buy orders for large profits.

Example of a cryptocurrency pump & dump group lead-up announcements to the event

 

The coin (GAM) to be pumped and dumped is displayed in an image to avoid bot abuse

The coin in question (GAM) saw a ~5% pump from 19h15 (time of the announcement) to 19h33, before immediately dropping back to pre-pump levels.

Red arrow indicates the exact time when the coin for the pump was announced

The example shown above is purely for educational purposes on the mechanics of a pump-and-dump group. It is not representative of the huge losses that can be incurred in blindly following anonymous instructions. More “successful” pumps are paired with fake news and interest being generated on social media in order to lure unsuspecting outsiders to pump the coin further, and ideally fill the buy side of the books when it comes time for the dump.

In line with an SEC report issued earlier this year, the CFTC recommends that customers ought to only purchase “alternative virtual currencies, digital coins or tokens that have been thoroughly researched” and not base purchasing decisions on social media tips or sudden price spikes.

HOW TO BE A WHISTLEBLOWER AND CASH IN

When considering the wording of the CFTC announcement, it’s clear that cashing in on the bounty is not as simple as hotlinking the Telegram invite to that pump-and-dump group you saw advertised on Twitter. To be a whistleblower requires a report of insider knowledge into the activities in question, and the ability to produce evidence that implicates a particular individual/group of individuals who have the funds to pay the monetary sanctions imposed.

Let’s break down the keywords:

“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”.


That’s a lot of conditionals.

Original information: This is legalese for something not publicly available, i.e personal information of the pump-and-dump group ringleader(s) that can lead to their capture.

Successful enforcement action: The original information you provide must be sufficient to link the suspect in question to the pump-and-dump scheme, circumstantial evidence is not sufficient. More significantly, another parameter of successful is that the monetary sanctions listed must be recuperated from the perpetrator, not simply imposed.

Compensation only with monetary sanctions of $1 million or more: If you manage to provide original information, and that original information leads to successful enforcement action, and that leads to a “paltry” sum of $800,000 in monetary sanctions recuperated, you won’t see a dime for your efforts.

You could be eligible: This allows compensation to be issued solely at the discretion of the CFTC regardless if all the boxes above are ticked


While the reward may be difficult to collect, the shift in focus by regulatory agencies to nefarious targets in the crypto space is a welcome evolution from ineffective & unwarranted regulation aimed towards decentralized cryptocurrencies such as Bitcoin.

By Daniel Dalton via Crypto Insider

Back to homepage

Leave a comment

Leave a comment