The U.S. Commodity Futures Trading Commission (CFTC) has issued a customer advisory warning to customers of cryptocurrencies to avoid pump-and-dump schemes that can occur especially in what it refers to as the ‘thinly trade or new alternative virtual currencies and digital coins or tokens’. They advised against following tips on social media or sudden price hikes.
The CTFC acknowledged that pump-and-dump are not new phenomenon to the cryptocurrency pointing to the historical use of such schemes by “boiler room” schemes which peddled hype on penny stocks only to dump them when the prices were high enough leaving investors with worthless stocks.
Apart from warning investors not to be hoodwinked by the modern boiler room peddlers in social media, the CTFC has also taken the step to warn against participation is such schemes and offered reward to whistle-blowers of between 10 and 30 percent of any successful enforcement action.
Click here to read the whole CTFC Advisory