Crypto market manipulation via Telegram is now a giant business

According to recent research from Cornell University, pumping and then dumping crypto via Telegram has ballooned into a giant business model. The volume represents some $3.2 trillion in trading for a profit of $250 million. That profit is for the most part, pocketed by some 500 illustrious figures on social media. Here’s how it works.

Crypto Signals

If you trade crypto and surf on social media (which is pretty much everyone), you’ve probably heard of these “crypto pump signal” groups. This refers to messages inviting you to join a group (usually on Telegram) to pump or dump a crypto coin “together” (since there aren’t too many rules for smaller coins, this is indeed possible).

Cornell researchers built a web crawler that found about 750,000 messages and then created an overview of the various channels in which people agreed to “pump” or “dump” simultaneously.

As an example, they followed the market manipulation of a day of trading in Vechain, a smaller altcoin that did very well during the 2021-2022 bull run but has since fallen somewhat in the rankings.

Vechain

The group they followed had agreed to short Vechain from the moment this digital currency would reach a certain level (target 1) during a certain time period.

Because more than 100 investors all sell together from this moment, it seems as if the market is reacting to news (which of course it is not). As a result, there is usually an automatic reaction from the bots and algorithms that also trade, which in this case pushes the market even lower.

As a result, the group wins, usually a few percent per day, and then cashes out again.

Of course, the smaller investors think they have won in this way, perhaps 1 or 2 percent, but what they do not know is that they too were manipulated; The larger players, who organize these ‘pump and dump’ signals, usually get in a little earlier for much larger amounts, and get out before there is a risk of the bots and algorithms correcting themselves, which of course makes their profit much greater.

According to the Cornell research, there are currently no fewer than 500 people on Telegram who organize these pump and dump signals.