By Jocelyn Simpson
Irrespective of whether someone adhered to the hype and invested in Bitcoin, most people have heard and talked about the newly invented cryptocurrency. As often is the case with exciting, new technology, people have been acting impulsively, and quickly investing in a company they do not know enough about. This enthusiasm, paired with the fact that cryptocurrency trading is completely unregulated, provides the perfect environment for scammers to take advantage of rookie traders.
One platform making waves for crypto fraud, is taking place on Telegram, a cloud based instant messaging service. One particular chatroom, called Crypto Callz, is a well-known group of approximately 5,729 members who all spread fake news across the web in an attempt to get inexperienced traders to invest in cryptocurrencies, such as Bitcoin. After the value of the stock rises, the scammers sell and leave the inexperienced investor is left with a stock of diminished value. This type of market manipulation, commonly called a pump and dump, is unregulated in the virtual world and the SEC has yet to make any concrete plan to address it.
However, it is unclear whether the cryptocurrency market should be regulated, or if people who want to invest need to do their homework, and take their time to find reliable information about stocks prior to investing. Although many individuals like to talk about Bitcoin, most people do not understand what the cryptocurrency actually is, nor do they understand the unpredictable nature of a virtual coin that is not backed by the government or any central bank. In addition, the public was warned by the SEC which made announcements regarding cryptocurrency fraud, and cautions investors about the market manipulation taking place on websites such as Telegram. People who are willing to give away money in the hopes of making money on a stock should be relying on verified sources, not websites such as Reddit, where the people positing can easily forge and misrepresent information.
It is also concerning that many of the individuals coordinating the corrupt schemes do not believe they are doing anything wrong. An administrator from Crypto Callz identified himself to Buzzfeed news, and opined that everything his group was doing was “perfectly legal.” Moreover, spokespersons for companies such as Telegram claim that they will not take down the fake news or shut down message boards because although the practices are unethical, they do not believe what is taking place to be illegal.
Without any plan of action or any discussion of future regulation, it appears that groups like Crypto Callz will continue spreading false information and using private chat apps to concoct get- rich- schemes.
Student Bio: Jocelyn is a 2L at Suffolk University Law School and is a staff member of the Journal of High Technology. Jocelyn holds a BA in Educational Studies from Colgate University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.