Study: Pump and Dump Schemes have Negligible Effect on Crypto Markets

A study by the Massachusetts Institute of Technology has revealed that machine learning can identify crypto pump and dump schemes before they happen. It arrived at a figure generated by fraudulent trading which is a tiny fraction of the total trade volume.
$7 Million Monthly Volume From Pump and Dumps
The study went on to reveal that there are at least two pump and dump schemes per day which generate $7 million in trade volume per month. NewsBTC’s daily crypto market wrap often identifies a random altcoin that is pumping for no apparent reason. However, in the grand scheme of things this figure is negligible when compared to a daily trade volume of around $15 billion.
In February the US Commodity Futures Trading Commission (CFTC) issued a specific warning about these types of scam, and regulators have begun to actively pursue the perpetrators. According to the regulator these schemes are considered as securities fraud. Research carried out at Imperial College London looked into pump and dump schemes in detail in order to develop an algorithm that can detect them.
The report highlights how pump and dumps are orchestrated as the organizer quietly accumulates an obscure altcoin before announcing a pump is about to begin on social media. Once the announcement, usually on Twitter or Telegram, has been made traders load up buy orders and the price begins to spike. The organizer then sells off his stash as the pump reaches a peak resulting in a dump back to previous levels.
As an example the researchers studied a single pump and dump scheme that occurred on November 18. The Official McAfee Pump Signals channel with over 12,000 members was monitored to glean details on the scheme. The chosen altcoin was BVB, worth around 35 satoshis at the time.
“We notice that the first buy order was placed and completed within 1 second after the first coin announcement. After a mere 18 seconds of a manic buying wave, the coin price already skyrocketed to its peak,” said the researchers noting a peak of 115 sats.
The speed of the operation was key as anyone entering the trade after around 18 seconds would not have made a profit. This was just one example but the study noted 236 other pump-and-dump events that took place between July 21 and November 18. The researchers used the historical data from known pump and dumps to train a machine learning algorithm to identify signs that a one is about to occur.
Cyptocurrency scams are not likely to go away anytime soon so identifying and being aware of them is all part of the evolution of this ecosystem. A few people make a little money out of pump and dumps but the effect on the market as a whole is negligible.
Full study can be found here: https://arxiv.org/abs/1811.10109
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Singapore Residents Targeted in Crypto Scams, $78,000 Lost Between September and November

Members of the Singapore public have been targeted by the online advertisements of scammers posing as crypto brokerage services. The victims have been duped out of around $78,000 between September and November of 2018.
Familiar Scam Plagues Singapore Residents
According to a report in domestic news source The Straits Times, Singapore authorities have been made aware of several cases of fraud in relation to a cryptocurrency investment scheme. The scam is stated to have earned its perpetrators around $78,000 between the months of September and November of this year alone.
The platform, which goes unnamed in the report, is advertised online using numerous paid online advertisements posing as articles. They often feature celebrities from Singapore who are wholeheartedly endorsing the service and how lucrative it is. Of course, such scams have been tried before and are reminiscent of those using fake testimonials from the stars of Dragons’ Den and similar formats broadcast in other nations.
The articles direct visitors to other sites through links posted. These pages then encourage those following the hyperlinks to request a call back if they are interested in investing in Bitcoin. They also portray investments in Bitcoin as being incredibly secure, virtually risk free, and essentially a guarantee of future riches.
In a statement mentioned by the news report, the Singapore authorities said that the scheme was being operated from outside of the country and that it was entirely unregulated by its financial regulator, the Monetary Authority of Singapore (MAS).
This exposes investors to even greater risk of being swindled by such scams since they are being operated from outside of the regulator’s legal jurisdiction and legal recourse will be very difficult to initiate.
Individuals with any further information on this or any other similar scam are being encouraged to contact the Singapore authorities on a police hotline (1800-255-0000), or at www.police.gov.sg/iwitness.
Related Reading: Move over Twitter: Crypto Scams Have Infiltrated Facebook
Scammers Prey on Nation’s Embrace of Blockchain and Crypto
Whether the suspicions of the Singapore authorities that the scam is being run from outside the nation is true or not is unclear. However, one thing is certain, the fraudsters, if domestic or otherwise, have picked Singapore for its ever-growing interest in digital assets.
As a nation, Singapore has been keen to explore the implications of cryptocurrency and its underlying technology, blockchain. Earlier this year, NewsBTC reported on plans to create a multi-storey centre devoted to the fintech innovation, as well as regulators helping to incubate blockchain startups.
More recently, Asia’s monetary elites were privy to an extended conference devoted to blockchain and cryptocurrencies. Forbes’s Asia wing sponsored the “Decrypting Blockchain for Business” event, which was held earlier this week.
It saw the likes of Changpeng Zhao of Binance and Tommy Lee of BTCC, amongst many other industry experts presenting on the opportunities, risks, and developments associated with the ever-expanding industry.
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Bitcoin Blackmail Scam Terrorizing Paradise Valley Residents

A local Arizona police department is warning residents in the area of a potential blackmail scam involving Bitcoin.
Paradise Valley Residents Receive Threatening Letter Demanding Bitcoin
Paradise Valley, Arizona police department is warning residents via its official social media accounts of a blackmail letter being sent around that attempts to scare recipients of the letter into sending Bitcoin or risk having their dirty laundry exposed. The letter, which appears to try and extort $9,200 in Bitcoin from Paradise Valley residents, was sent by snail mail and includes text threatening to expose “evidence” of an affair.

“I know about the secret you are keeping from your wife and everyone else,” the letter reads.

The blackmail letter is authored by a criminal going by the alias GreyCircle54 and claims to know about a “secret” and even claims to have “evidence” of this secret. GreyCircle54 essentially claims that they weren’t specifically targeting the person, and did not “go out looking to burn” the recipient of the letter, however, they happened to discover the “evidence” and are using it to threaten innocent individuals that may have a guilty conscience.
Related Reading: Another Rapper Sued in Alleged Crypto Scam
GreyCircle54 gives the recipient two “paths:” pay up, or be exposed.
The scam is only effective if the recipient is having an affair, however, it was enough to frighten Paradise Valley residents into reporting the issue to the local authorities. Police have a copy of the letter as evidence.
Bitcoin Blackmail Scam Makes Return After FTC Warning
This isn’t the first time this Bitcoin blackmail scam reared its ugly head. Back in August, the United States Federal Trade Commission (FTC) Division of Consumer and Business Education, whose mission is to educate consumers on how to protect themselves, issued a warning via a blog post entitled “How to avoid a Bitcoin blackmail scam.”
The FTC back then called it a “new” scam targeting men, and denounced the practice as a “criminal extortion attempt to separate people from their money.” The FTC recommends anyone who receives a similar letter report it to local authorities, as residents did in Paradise Valley, or to report it to the Federal Bureau of Investigation (FBI).
Beware of Bitcoin Scams in By Mail, and on Social Media
Cyber criminals are always seeking ways to part investors from their cryptocurrency assets. However, by being extra careful and paying attention for warning signs, scams can often be identified before falling prey to a scammer. The FTC points out that scams like the Bitcoin blackmail letter often contain “classic signs” like “threats, intimidation, and high-pressure tactics.”
Related Reading: Indian Teen Threatens to Blow Up Airport Over Bitcoin Scam
Another classic warning sign: If something looks too good to be true, it probably isn’t. Such is the case with another type of Bitcoin scam, in which Twitter accounts market a “giveaway” to their followers. Twitter users are invited to send a small portion of a cryptocurrency to a wallet address, and in return, the user will receive a much larger sum of cryptocurrency. The “giveaway” is often riddled with spelling errors, and it makes little sense for corporations or public figures to give cryptocurrency away or need to receive some in advance to be able to send more in return – yet thousands of dollars worth of Bitcoin are lost to these scams daily.
 
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Indian Teenager Threatens to Blow Up Miami Airport over Alleged Bitcoin Scam

An Indian teenager is in hot water after threatening to carry out a deadly attack on a U.S. international airport after he failed to receive support from the FBI in relation to an alleged Bitcoin scam.
Bitcoin Scam Leads to Volatile Situation at Miami Airport
Bitcoin’s price may be experiencing an extreme lack of volatility, however, a new report involving a Bitcoin scammer has led to some potentially explosive action.
According to a local report, an 18-year-old student from the Northern Indian state of Uttar Pradesh has been detained and charged by anti-terrorism authorities, after the teen made a number of deadly threats against Miami International Airport.
The teen claims that he had taken $1,000 from his father and invested in Bitcoin, turning a massive profit from his initial investment. The 18-year-old then took his earnings, and invested in what turned out to be a scam. The young man explained during his interrogation, that the “fraudster” had promised massive returns, but instead made off with all of the teen’s money.
Upset, and unsure how to go about getting his money back, the unnamed teen decided to call the United States Federal Bureau of Investigation (FBI) – as many as 50 times – over the last month in an attempt to seek help and bring the scammer to justice. The FBI ignored his pleas for help, however, which caused the teen to escalate the situation.

“After not getting proper response from FBI, I made calls to Miami Airport authorities and threatened an attack. I told them that I would bring AK-47s, grenades and suicide belts and blow up the airport,” the 18-year-old said, according to interrogation reports.

The teen is said to have used a fake identity and fake email account to make the threats over the internet, but he was unable to hide his tracks. The FBI sought the help of India’s National Investigation Agency to help track down the individual, and the young male was eventually picked up by the Uttar Pradesh police department’s anti-terrorism squad and is facing a number of charges.
Crypto Makes for Explosive Emotional Moments
Irrational exuberance and complete despair are two ends of an emotional rollercoaster cryptocurrency investors have been riding for the past year.
It began in mid-November, when Bitcoin’s price went parabolic and exploded to its all-time high of $20,000. Investors struck it rich, and talk of Bitcoin’s price reaching $1 million per BTC was enough to keep hopes high. Except come January, the price of all leading cryptocurrencies began to crash, and a 11-month-long bear market ensued, leaving investors at the brink of capitulation and chaos.
Due to the amount of skin investors have in the “game” and the strong emotions tied to potential wealth, the bear market has led to some scary situations and investors taking risks in order to try and recoup a portion of their losses. In addition to the story above, back in March a Chinese investor threatened to commit suicide by drinking poison in response to his Bitcoin holdings being liquidated.
Video circulated around the internet of the crazed individual holding what appears to be poison in the lobby of cryptocurrency exchange OKEx, then threatening to drink the poison if his funds weren’t promptly returned. The example is yet another case of an investor risking too much, and being unable to cope with a substantial loss.
Word to the wise: Never invest more than you can afford to lose.
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Scammers Use Cryptocurrency ATMs to Target Potentially Vulnerable Victims

Australian police have been informed of a scam in which the perpetrators are requesting people deposit funds for them at cryptocurrency ATMs. It is thought that those behind the scam are targeting newly-arrived migrants who are unsure if such requests are genuine since they are navigating an entirely foreign system of taxation for the first time.
Elaborate Cryptocurrency Scam Generates Tens of Thousands of Dollars
According to a report in the U.K.’s Daily Mail newspaper, there have been four victims of the Australian crypto ATM scam to date. All of those defrauded out of funds were based in Melbourne’s eastern suburbs.
The scam itself involves those behind it contacting potential victims with a request for outstanding taxes. It states that these must be paid directly into one of the city’s cryptocurrency ATM machines and sent to an unknown address.
Police investigating the scam have reason to believe that those behind it are targeting newly-arrived economic migrants. This demographic is much more likely to be compliant with such a request since refusal to adhere to similar, legitimate requests could negatively impact on the immigration process.
As strangers in a foreign land, the victims are also much less likely to question correspondence supposedly from the government, since they have no yardstick to compare above board requests from authorities to fraudulent ones.
The victims were under the impression that they would be detained if they did not comply to requests for deposits at the crypto ATM in Braybrook, Melbourne. This scaremongering tactic is reported to have netted the scammers an undisclosed five-figure sum.
The Daily Mail also reports on a second variation of the same scam. This time, those behind it tell victims that they have been alerted to a debt of outstanding taxes by the federal police or private accountants.
Katherine Lehpamer, a local police representative, said of the scam:
“Anyone getting a call along these lines should make inquiries with the relevant authority before paying any money… We believe there are a number of victims who may be here on visas or not aware that authorities would never tell them to deposit money into an ATM.”
Scams involving cryptocurrency are nothing new. They come in literally all different guises. Some involve the promotion of fraudulent companies, others are orchestrated by vast armies of Twitter-based robots. Most of these rely on the victims’ own greed being their downfall.
The Australian ATM scam is particularly devious, however, since it plays on newly-arrived migrants’ fears of being returned to the land which they have often worked incredibly hard to escape. Since they will have every intention of doing things by the book in their new home, they are much more likely to fall victim to such a scheme.
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Crypto Market Leaders Call For Twitter to Ban ‘Scam Bots’

Crypto scam bots have become a common sight in the Twitter landscape, with many premier cryptocurrency personalities seeing an influx of fraudulent accounts commenting on their posts. This has become such a large problem that well-known cryptocurrency figures, like Binance’s CEO and Charlie Shrem, have signed an “open letter” calling for these scams to end.

What Are These So-Called ‘Twitter Scambots’?

For those who are unaware, these bots are social media accounts that are created in the guise of a celebrity, an entrepreneur, or a well-known cryptocurrency figure. Some scammers have been known to go above and beyond traditional bots, obtaining the exclusive verified check-mark to make the scam account look even more bona fide.

Once made in the likeness of a target, the bots will begin to infiltrate the comment sections of trending Twitter messages, asking users to send cryptocurrencies to a wallet address, in exchange for a substantially larger payout. Not only does the bot post a misleading comment, but it often enlists the help of other enslaved accounts to engage with the malicious tweet, making it more visible to the public.

Obviously, nothing ever comes of these payments, with many experienced Twitter users realizing that the funds offered are too good to be true. However, some naïve users, new to the crypto sphere or Twitter, have reportedly fallen victim to this method of cybercrime, losing their funds forever.

These bots have become such a widespread phenomenon that Elon Musk, currently the world’s most famous entrepreneur, has even begun to acknowledge their presence, jokingly issuing a tweet regarding the “Etherium scambots.”

Kaspersky Labs, a Russian cybersecurity firm, pointed out that this scheme was one of the “social engineering” acts of cybercrime that saw criminals net nearly $10 million last year. This figure attests to the fact that this issue has become prevalent in the community, triggering a discussion on how to counteract this problem.

“End The Hypocrisy, #SaveTwitter”

It has become apparent that cryptocurrency community members, whether influential or not, are sick and tired of this omnipresent issue. Svandis, a crypto analytics community, has become the voice of the community in the fight against these scambots, recently publishing an open letter regarding the issue that was aimed at Twitter.

The letter covers a variety of pressing topics, including the fact that the platform had purged “suspicious and dormant accounts,” but not scambots, along with the hypocrisy that Twitter was taking a part of. Svandis wrote:

“Twitter’s public stance on cryptocurrency and blockchain technologies is inconsistent and ambiguous. At a time when companies and individuals, even not-for-profits intent on educating individuals, are barred from advertising to interested participants via Twitter, it is not just hypocritical, but shameful that the company allows these spam bots and false accounts to exist and rampantly scam users, while spreading misinformation.”

Originally, the letter was only seen by a few eyes, but it started to rapidly gain traction as Binance’s CEO, Charlie Shrem, and Crypto Rand put their stamp of approval on the letter, retweeting the Medium post.

Surprisingly enough, Ethereum co-founder Vitalik Buterin, who was gone as far as to change his Twitter name to “Not giving away ETH,” has not signed the letter. However, Buterin has still been outspoken against these bots, calling for Jack Dorsey, the CEO of Twitter to amend the issue.

The Ethereum co-founder and well-known crypto personality called upon members of the Ethereum community to make a “layer two scam filtering solution,” which may consist of something like a web plugin that automatically hides scam tweets.

Despite holding a positive sentiment regarding cryptocurrencies, Jack Dorsey, the CEO of Square and Twitter, has surprisingly not addressed a problem that is near and dear to a community he appreciates.

Nonetheless, if this open letter gains enough traction, many expect for Dorsey, with the social media handle @jack to eventually address this small, yet dedicated portion of Twitter’s user base.

 

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