Crypto exchange is planning open price manipulation

In the crypto market, “pump and dump” has become a common expression. It’s a way to manipulate the price of an asset, oftentimes for an economic gain.

Now, the Russian crypto exchange Yobit announces on Twitter that they are going to do a so-called “pump”. This will be done by the exchange by purchasing a randomly selected cryptocurrency on its own platform.

YoBit Pump in 22 hrs: https://t.co/RIbW7OhKzM
We will buy one random coin for 1 btc every 1-2 mins 10 times (total buy amount – 10 btc).

— Yobit.Net (@YobitExchange) October 10, 2018

If Yobit buys a specific cryptocurrency for a lot of money during a short period of time, they can manipulate the demand for it. Then, the price of the cryptocurrency can go up.

One reason why the exchange would use this strategy could be that they want to make money on the rise. In such a case, the exchange will most likely sell the cryptocurrency for a profit after the price has gone up.

ADVERTISEMENT

Illegal method

The “pump and dump” strategy is illegal in the traditional stock markets and can lead to large fines, according to Investopedia. But in the crypto markets, there are no direct rules against the strategy.

The crypto exchange Yobit has previously received criticism from several places in the crypto community. Among other things, the criticism has been about the fact that the users on the exchange have had difficulty withdrawing their cryptocurrencies from the platform, Cointelegraph writes.

Follow Trijo News on Facebook, Twitter and Telegram.