Pump-and-dump schemes are nothing new in the world of Bitcoin and cryptocurrencies. Such scams and hype cycles come around virtually every other week. The US Commodity Futures Trading Commission is all too aware of such developments. As such, the agency has created a bounty program meant to encourage whistle-blowers to expose these schemes.
Ending Crypto Pump-and-dumps
Those of us who have been involved in cryptocurrency for multiple years will have noted a disconcerting trend. Whenever a new cryptocurrency comes around, there is a lot of initial hype. However, there is also a very real chance that such currencies will turn out to be pure pump-and-dump schemes. Most of the altcoins we have seen in the past few years adhere to this P&D-style of marketing, and eventually become obsolete.
This type of behavior leaves a lot of bagholders behind. Consequently, people become a lot more cautious when it comes to dealing with various cryptocurrencies. Considering that the cryptocurrency industry already has its own problems when it comes to its public image, the last thing we need is more pumps-and-dumps. Unfortunately, it seems such schemes aren’t going anywhere, even though the CFTC has come up with a plan to curb this type of activity.
More specifically, the CFTC has created a bounty program focusing on cryptocurrency pump-and-dump whistle-blowers. The objective is to encourage such whistle-blowers to come forward and expose projects which will become shady sooner or later. This is another positive measure meant to protect novice speculators from losing a lot of money, as that is still one of the biggest risks associated with cryptocurrency investment.
Anyone who has “original information that leads to a successful enforcement action that leads to monetary sanctions of $1 million or more” will be eligible for a monetary award. There is no fixed amount associated with this bounty program, as whistle-blowers will be eligible for a reward of anywhere between 10% and 30% of the sanctions. This certainly sounds appealing to anyone who wants to make the cryptocurrency industry more secure in the long run.
It is evident there are little to no repercussions for any scammer who tricks cryptocurrency speculators into buying a specific coin or token. Although there are some projects which have led to major lawsuits, the total number of scams is still a lot larger than the number of lawsuits related to cryptocurrency pump-and-dumps. With this new bounty program, things may improve in the long run, but it will not be easy to drive this change.
For the time being, we will have to wait and see how successful the CFTC venture will be. A monetary reward for whistle-blowers is a good thing, but it doesn’t necessarily mean the number of cryptocurrency scams will drop off all of a sudden. It would be good to see a decrease in the number of pump-and-dumps in the cryptocurrency world, but one shouldn’t expect any major changes in the near future.