All financial markets experience some kind of fraud and manipulation, but bitcoin trading seems to have a special knack for it.
First came the “wash trades,” where miners traded the same coin back and forth at progressively higher prices to create the appearance of a rising market. Then came “painting the tape,” where a single trade at an inflated price created mark-to-market profits for every bitcoin holder in the world.
Then there was the classic “pump and dump,” where a gang of miners would raise prices with small trades and then dump their inventory on unsuspecting newbies who bought in just before the crash. Wash, rinse and repeat.
Some scams were more sophisticated, including the sale of cryptocurrency tether, which promised a “stable coin” always worth the same amount in dollars. The problem was the tether sales proceeds were not held in dollars but were used to buy bitcoin to pump up that market.
The assumption was that the transaction could always be unwound (with profits for the scam sponsor), but the collapse of bitcoin prices revealed that tether was just a Ponzi scheme. There are many more frauds.
Just when you think you’ve see it all, a new scam emerges. This article describes the fact that cryptocurrency sponsors can get positive ratings and reviews on crypto platforms, including celebrity endorsements, just by paying for them, regardless of the actual merit of a coin.
When it comes to cryptos, caveat emptor – and don’t believe the hype.
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