Meet the crypto trader who says he bought a Tesla with 'pump and dump' profits but claims the scams aren't bad: 'It's a game'
BI has reported on the prevalence of “pump and dump” scams in cryptocurrency markets.
A person claiming to organise these scams got in touch with BI after our first report.
He argues that manipulation is “everywhere” and say it’s “a game.”
He claims to have made “hundreds of thousands” trading and claims groups on the deep web organise even more sophisticated market manipulations.
LONDON — Meet Nico, a techie from Belgium who spends his days trading.
Nico — the name he gave Business Insider — used to plays the stock market but has increasingly favoured cryptocurrency markets in recent years.
Why? Opportunities to make easy money.
“Market manipulation, it’s everywhere,” Nico told Business Insider. “That’s why this pump-is-the-devil thing is funny.”
Nico contacted Business Insider through an intermediary after we published our recent investigation into pump and dump scams on cryptocurrency exchanges such as Bittrex and Yobit. Nico claims to run one of the groups on messaging app Telegram that are used to coordinate the buying activity.
“We all use Bittrex for market manipulation,” Nico told BI. “Because it’s faster and easier and if we are all on the same platform, the price will reflect faster.”
Nico’s personal bankroll — the amount that he keeps in his account to trade and never withdraws — is $150,000, he said. He has been trading in cryptocurrency markets for two and a half years and estimates he’s made “hundreds and thousands” in profit.
What has he spent the money on? A Tesla and a deposit down on a small house, he said. Tesla cars cost between £66,000 and £108,000 in the UK, according to prices listed on the company’s website.
A spokesperson for Bittrex told BI that “any kind of market manipulation is strictly prohibited by our terms of service” and said that it “conducts periodic compliance reviews” to “protect our service and users from harm.”
BI spoke to Nico for over an hour over Skype text chat, explaining why he and others engage in pump and dump scams, why he doesn’t think they are a bad thing, and talking about plans to build a mega-group of pump and dumpers.
Nico was keen to protect his identity (the Skype chat was conducted through a friends account) but did provide links to Telegram groups and a forum on the deep web to support his claims.
Here’s what he told BI:
‘They know the rules’
The first thing Nico wanted to make clear is he doesn’t think the pump and dump scams he helps to organise are bad.
Pump and dump schemes are where people collude to buy a small cryptocurrency at the same time and thus push up the price by inflating demand. Those involved then book a quick profit, often in a matter of minutes, by selling to new investors who are attracted by the rising price.”Why would it be [bad]?” Nico said. “It’s not like in stock trading where it causes victims in real life.”
He argues that because the “pump” is so quick — prices can leap higher and then crash in just a matter of minutes — there is no time to mislead other investors as to the nature of the investment. If they lose money that’s their own fault for not doing proper research before buying — caveat emptor.
“With Pumps [sic] during one minute, they cannot be thinking that. You would assume that newbies get misinformed but how? There are hundreds of currencies, there is no way they have the time to react to this,” he said.
“The ones that lose money are the ones [sic] from our own groups that enter [the pump] too late. And they know the rule[s].”
What are the rules?
“Everyone that doesn’t find a price to sell with profit stays in the currency,” Nico says. “They always end up winning — because we will pump it again eventually, or another group, and it never takes more than a few days. It’s a never-ending cycle.”
He adds: “It’s like a game — The faster wins. But no innocent victim.”
‘What is public?’
Nico argues that the “signals” to buy that traders send on Telegram groups are not unlike stock recommendations from analysts.
“Imagine the boss from JP Morgan says ‘You should buy that stock it’s awesome.’ People buy, the price goes up, and six