December 29, 20173min947

Cryptocurrency Influencers May Be Aiding Pump and Dumps

Cryptocurrency influencers on websites like YouTube and Twitter, hold a lot of sway over their audiences and must be very tempted to use it for their own gain or to sell it on to third parties.

A simple mention of a coin can send prices soaring hundreds of percent in a single day. What’s to stop them loading up on a certain coin, promote (or shill as the correct slang term for this is in crypto-land) it and then dump it after it increases 100 or more percent in value?

That’s right, nothing, absolutely nothing.

The problem was brought to a head recently, when the outspoken founder of the well-known anti-virus software, John McAfee, was accused of pumping and dumping coins on his twitter account.

Many of his 500k+ followers bought Verge (XVG) when it exploded in value following his recommendation, only to then watch it plummet, as many realized what was going on. This has left many of them scolded, holding bags of coins now worth half of what they bought them for.

The lesson they hopefully learned, is that there is no sure way of knowing if there is good or bad intent behind any influencers’ recommendations and to always do their own research and due diligence before investing.

McAfee must have upset some powerful forces on the internet. His account got hacked recently and started promoting a number of random coins, to confuse the bots that had begun trading based on his recommendations.

He has now regained control of his Twitter account and even the BBC reported on the incident yesterday.

There are many fantastic projects available on exchanges. But in all fairness, for most of them, no one really knows their true value. It’s very difficult to justify multi-billion valuations for companies with no or very early stage products.

The old adage holds truer by the day: “Only invest what you are willing and able(!) to lose”. Always keep in mind that crypto investing is not that much better than a game of roulette at a Las Vegas casino.

It is very hard to know much about most of the “listed” crypto companies/currencies. And until that changes, invest with extreme caution.

This space is full of novice investors looking for the moon and Lambos without as much a seatbelt on. It is completely unregulated and anyone can claim anything. Ignore that fact at your own peril.


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