Hong Kong police and Securities and Futures Commission (SFC) have charged 13 suspects, a syndicate, of a sophisticated ‘ramp-and-dump’ scheme, otherwise known as pump-and-dump scheme
Pump and Dump Scheme
A pump and dump scheme is a form of securities fraud that involves artificially inflating the price of a stock via false and misleading positive statements, in order to sell it for a higher price.More recently this type of scheme has also extended to the cryptocurrency space. Subsequently, a group of individual or investors will buy up a crypto asset for a low price simultaneously, prompting the price to rise. This abrupt and rampant increase in an asset’s nominal value will prompt unknowing traders to follow, whereby purchasing the asset in hopes of riding the momentum. However, upon attracting additional investment, the original buyers then sell off the assets to turn a quick profit. This sudden shift in supply and demand results in significant losses, especially for later entrants into the asset.Understanding Crypto Pump and Dump Schemes Pump and dump schemes are orchestrated by a group of organizers, often promoting a crypto coin through social media or other messaging platforms.Often times, scammers will select a specific coin and an exchange to target with the aim of driving up the selected coins volume over a short period of time. In most instances, the coin will have low volume, whereby allowing scammers to lock up as much of the available liquidity as possible. In such a scenario, scammers are be able to fix the price whilst they sell off their newly acquired coins.Pump and dump schemes can in theory be profitable for ordinary investors. This is quite rare however as usually the initial organizers or scammers are the ones reaping the profits.This is due known information and the timing during which the pump and dump occurs.
A pump and dump scheme is a form of securities fraud that involves artificially inflating the price of a stock via false and misleading positive statements, in order to sell it for a higher price.More recently this type of scheme has also extended to the cryptocurrency space. Subsequently, a group of individual or investors will buy up a crypto asset for a low price simultaneously, prompting the price to rise. This abrupt and rampant increase in an asset’s nominal value will prompt unknowing traders to follow, whereby purchasing the asset in hopes of riding the momentum. However, upon attracting additional investment, the original buyers then sell off the assets to turn a quick profit. This sudden shift in supply and demand results in significant losses, especially for later entrants into the asset.Understanding Crypto Pump and Dump Schemes Pump and dump schemes are orchestrated by a group of organizers, often promoting a crypto coin through social media or other messaging platforms.Often times, scammers will select a specific coin and an exchange to target with the aim of driving up the selected coins volume over a short period of time. In most instances, the coin will have low volume, whereby allowing scammers to lock up as much of the available liquidity as possible. In such a scenario, scammers are be able to fix the price whilst they sell off their newly acquired coins.Pump and dump schemes can in theory be profitable for ordinary investors. This is quite rare however as usually the initial organizers or scammers are the ones reaping the profits.This is due known information and the timing during which the pump and dump occurs. Read this Term, due to having committed several offences.
The charges came after a joint investigation by law enforcement and the financial market watchdog against the fraudulent stock investment schemes. The syndicate members allegedly violated regulations around market manipulation and money laundering within the schemes.
Announced on Friday, five of the suspects are facing charges of conspiracy to defraud and have conspired to create a scheme with the intention of defrauding the securities market participants. Two of them, along with the other eight, are also facing money laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Read this Term charges.
They are now out on bail, with bail bonds ranging from HK$50,000 to HK$1 million. However, they cannot leave Hong Kong and were required to submit all travel documents.
The official announcement detailed that the suspects allegedly organized and executed the ‘ramp-and-dump’ schemes in the shares of the two Hong Kong-listed companies. They promoted the stocks on social media and manipulated the trading of a large volume of the stocks using a number of nominee accounts.
Allegedly, the five primary suspects conspired with the other individuals between October 2018 and May 2019 to corner the stocks of the targeted companies. Then they started social media campaigns to convince investors to purchase those stocks.
Once the prices of the stocks were ramped or pumped, the suspects sold their holdings in the two companies making massive profits. In addition, it resulted in the collapse of the price of the stocks once demand dried up.
Rampant Frauds
Pump-and-dump schemes are rampant around the globe and regulators are actively cracking down on them. Earlier, Australia’s ASIC infiltrated Telegram groups coordinating such fraudulent schemes.
Last April, the US SEC busted a penny stock pump-and-dump scheme and charged 16 individuals that generated more than $194 million in illicit proceeds globally.
Hong Kong police and Securities and Futures Commission (SFC) have charged 13 suspects, a syndicate, of a sophisticated ‘ramp-and-dump’ scheme, otherwise known as pump-and-dump scheme
Pump and Dump Scheme
A pump and dump scheme is a form of securities fraud that involves artificially inflating the price of a stock via false and misleading positive statements, in order to sell it for a higher price.More recently this type of scheme has also extended to the cryptocurrency space. Subsequently, a group of individual or investors will buy up a crypto asset for a low price simultaneously, prompting the price to rise. This abrupt and rampant increase in an asset’s nominal value will prompt unknowing traders to follow, whereby purchasing the asset in hopes of riding the momentum. However, upon attracting additional investment, the original buyers then sell off the assets to turn a quick profit. This sudden shift in supply and demand results in significant losses, especially for later entrants into the asset.Understanding Crypto Pump and Dump Schemes Pump and dump schemes are orchestrated by a group of organizers, often promoting a crypto coin through social media or other messaging platforms.Often times, scammers will select a specific coin and an exchange to target with the aim of driving up the selected coins volume over a short period of time. In most instances, the coin will have low volume, whereby allowing scammers to lock up as much of the available liquidity as possible. In such a scenario, scammers are be able to fix the price whilst they sell off their newly acquired coins.Pump and dump schemes can in theory be profitable for ordinary investors. This is quite rare however as usually the initial organizers or scammers are the ones reaping the profits.This is due known information and the timing during which the pump and dump occurs.
A pump and dump scheme is a form of securities fraud that involves artificially inflating the price of a stock via false and misleading positive statements, in order to sell it for a higher price.More recently this type of scheme has also extended to the cryptocurrency space. Subsequently, a group of individual or investors will buy up a crypto asset for a low price simultaneously, prompting the price to rise. This abrupt and rampant increase in an asset’s nominal value will prompt unknowing traders to follow, whereby purchasing the asset in hopes of riding the momentum. However, upon attracting additional investment, the original buyers then sell off the assets to turn a quick profit. This sudden shift in supply and demand results in significant losses, especially for later entrants into the asset.Understanding Crypto Pump and Dump Schemes Pump and dump schemes are orchestrated by a group of organizers, often promoting a crypto coin through social media or other messaging platforms.Often times, scammers will select a specific coin and an exchange to target with the aim of driving up the selected coins volume over a short period of time. In most instances, the coin will have low volume, whereby allowing scammers to lock up as much of the available liquidity as possible. In such a scenario, scammers are be able to fix the price whilst they sell off their newly acquired coins.Pump and dump schemes can in theory be profitable for ordinary investors. This is quite rare however as usually the initial organizers or scammers are the ones reaping the profits.This is due known information and the timing during which the pump and dump occurs. Read this Term, due to having committed several offences.
The charges came after a joint investigation by law enforcement and the financial market watchdog against the fraudulent stock investment schemes. The syndicate members allegedly violated regulations around market manipulation and money laundering within the schemes.
Announced on Friday, five of the suspects are facing charges of conspiracy to defraud and have conspired to create a scheme with the intention of defrauding the securities market participants. Two of them, along with the other eight, are also facing money laundering
Money Laundering
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders.
Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laundered through financial institutions each year.This is not entirely surprising given the structure of the financial services industry and the nature of products and services offered by its participants.An ecosystem that involves the management, control, and processing of finances is inherently vulnerable to abuse by money launderers.Money Laundering ExplainedThe act of laundering is committed in circumstances in which an individual or entity is engaged in an arrangement that involves the proceeds of crime. These arrangements include a wide range of business relationships, i.e. banking, fiduciary and investment management.However, the degree of knowledge or suspicion will depend upon the specific offense but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases, the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.One of the primary criticisms against cryptocurrencies has been their propensity for money laundering. Their anonymous nature and unregulated network structure make them ideally suited for money launders. Read this Term charges.
They are now out on bail, with bail bonds ranging from HK$50,000 to HK$1 million. However, they cannot leave Hong Kong and were required to submit all travel documents.
The official announcement detailed that the suspects allegedly organized and executed the ‘ramp-and-dump’ schemes in the shares of the two Hong Kong-listed companies. They promoted the stocks on social media and manipulated the trading of a large volume of the stocks using a number of nominee accounts.
Allegedly, the five primary suspects conspired with the other individuals between October 2018 and May 2019 to corner the stocks of the targeted companies. Then they started social media campaigns to convince investors to purchase those stocks.
Once the prices of the stocks were ramped or pumped, the suspects sold their holdings in the two companies making massive profits. In addition, it resulted in the collapse of the price of the stocks once demand dried up.
Rampant Frauds
Pump-and-dump schemes are rampant around the globe and regulators are actively cracking down on them. Earlier, Australia’s ASIC infiltrated Telegram groups coordinating such fraudulent schemes.
Last April, the US SEC busted a penny stock pump-and-dump scheme and charged 16 individuals that generated more than $194 million in illicit proceeds globally.
This text was written byObserveWith over a decade of institutional funding expertise, I focus on figuring out progress alternatives on the intersection of technological disruption and macro-thematic vitality shifts. I've spent the vast...
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