Telegram Officially the World’s Biggest ICO With $850 Million Raised So Far

Washington’s top commodity regulator has issued a stern warning to investors about cryptocurrency pump-and-dump schemes, which have become more prevalent in the wake of the ICO boom that began last year.

CFTC Issues Warning

In a strongly worded release, the Commodity Futures Trading Commission (CFTC) on Thursday urged investors not to participate in pump-and-dumps, which are classified as a form of security fraud. The regulator said this form of fraud is easier to implement than ever before, with mobile chat groups and internet message boards becoming the go-to method for disseminating false or misleading statements about a particular asset.

“The same basic fraud is now occurring using little known virtual currencies and digital coins or tokens, but thanks to mobile messaging apps and Internet message boards, today’s pump-and-dumpers don’t need a boiler room, they organize anonymously and hype the currencies and tokens using social media,” the CFTC said.

The regulator added the following:

“Some pump and dumps use false news reports, typically about a famous high-tech business leader or investor who plans to pour millions of dollars into a small, lesser known virtual currency or coin. Other fake news stories have featured major retailers, banks, or credit card companies, announcing plans to partner with one virtual currency or another.”

Lesser Known Coins the Target

In the world of cryptocurrency, pump-and-dumpers often target lesser known coins that can be bought for pennies. The hype machine then goes to work convincing speculators to enter trades as quickly as possible. In a market that added 3,300% in the span of a year, convincing the masses that it’s now-or-never is fairly easy.

Although it’s not always easy distinguishing which cryptocurrencies have been artificially inflated by fake stories, some possible recent candidates include UBIQ, Golem Dragoncoin, DigiByte and Verge.

Others argue that all cryptocurrencies are pumped and dumped because it’s almost impossible to determine their intrinsic value (if they even have one at all). The author believes this argument conflates true pump-and-dump schemes from the common perception that cryptocurrencies are in a bubble (it’s possible to be in the latter without being a product of the former).

That being said, investors should be especially weary of obscure coins that surge unexpectedly without cause or explanation. Although it may not be an apparent pump-and-dump, it could be a case of excessive speculation.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

The post Telegram Officially the World’s Biggest ICO With $850 Million Raised So Far appeared first on Crypto Currency Online.

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