Bittrex Cracks Down on Pump and Dumps
If you’re active in the crypto investment and trading scene, you’re likely familiar with pump and dumps. If not, the name pretty much says it all–a pump and dump is a coordinated, group effort to pump up a cryptocurrency’s price, only to cash out of the crypto and crash its valuation when their profit reaches a certain threshold. As you can probably imagine, pump and dump tactics have made knowing participants a lot of money. But for every winner there’s a loser, and many unaware investors have lost money as a result of these schemes.
Pump and dumps foster volatility and uncertainty in an already turbulent market. It’s comforting, then, that Bittrex, the 3rd largest crypto exchange in the world, is taking a stand against such manipulative tactics.
In a statement published on Bittrex’s trading FAQs last Friday, the team announced that they would take increased measures to combat pump and dump traders and their tactics:
A general statement about market manipulation tactics: Bittrex actively discourages any type of market manipulation, including pump groups. Consistent with our terms of service, we will suspend and close any accounts engaging in this type of activity and notify the appropriate authorities.”
This notice sends a clear message to pump and dump communities. Not only will they close their accounts, but they’ll report them to authorities. In an industry that is still largely unregulated, pump and dumpers will likely be one of the primary focuses of future law enforcement.
Bittrex will also increase minimum trade sizes and remove orders older than 28 days old. While these provisions are less tangible than the aforementioned threat, they would still address common pump and dump tactics–namely, micro orders and long-term orders that allow pumpers to accumulate cryptos over the long-term before they erupt in value.
The playbook Bittrex devised for expunging pump and dumps should set a positive example for other exchanges to follow. For now, the message is at the very least encouraging, and hopefully, time will prove its efficacy.
Pump and Dump Image Via Shutterstock.