These groups that manipulate cryptocurrency prices using the old “kettle” technique.

In mid-May, the price of the cryptocurrency Enzyme rose sharply before declining, with very high trading volume. A group of speculators has tricked many people into buying, reselling the crypto on their behalf.

Some speculators are fueling the cryptocurrency market, which is currently going through a complicated period. A cryptocurrency whose price suddenly jumps before falling: speculators, organized in groups, no longer hesitate to launch lightning operations to artificially inflate the value of these highly volatile digital assets and quickly reap profits.

On May 15, an obscure cryptocurrency, Enzyme, went from $ 45 to $ 26 in just a few hours, with a very high volume of transactions. A few hours later it collapsed and is now only worth around $ 27.

At the origin of this movement: a Telegram messaging group on which various investors have chosen their target before taking action.

“It is illegal on the stock markets, but criminals are exploiting the less stringent regulatory framework for cryptocurrencies,” explains Mircea Mihaescu of specialist firm Coinfirm.

In the bag there is also a specific term to talk about this type of practice: it is the “hot room” or technique of the kettle. This involves distilling false information (and / or strongly encouraging many people to buy a stock) to raise the price of an asset (one is already invested in) and quickly reselling it to pocket more value. New investors, on the other hand, very often find themselves at a loss after buying at most. Price manipulation prohibited on regulated markets, but this ban does not apply to cryptocurrencies.

To give more scope to their action on the Enzyme, the investors of the Telegram group also used a generic public social network, in this case Twitter, to encourage other people to invest as well.

“The whales (nicknames of the big investors, ed) collect a lot of MLN (the abbreviated name of Enzyme on the markets, ed), it’s worth a try”, for example tweeted a certain Cryptosanta.

Enzyme Finance, the company that manages the cryptocurrency, tried to calm things down, warning to be wary of “fake accounts” that were trying to suddenly inflate their value. But it was too late and many investors had already taken the risky step of buying and then selling fast enough before the souffle dropped and demand ran out.

A non-isolated phenomenon

Almost all of them are lost because in these schemes it is essential to act very quickly. For the Enzyme, the bullish push lasted only a few minutes and the only ones who had the opportunity not to lose money were the initiators of the movement. “In all these manipulations, everyone is convinced that they are” the one who will benefit from the price increase, explains behavioral economist Stuart Mills, of the London School of Economics.

The phenomenon is not isolated. Other groups are promoting a similar operation in the coming days. According to data scientist Matt Ranger, most of these actions are launched by people who above all have strong marketing acumen.

“You don’t need to know how to write a line of code,” he points out. You just have to know how to write messages that resonate with crypto-asset investors, taking up, for example, the theme of the failure of large economic institutions.

“It’s up to me to deceive others”

Conspiracy theories abound, and some suspect that large American investment funds have orchestrated the current cryptocurrency collapse and then bought them at a good price.

“Suddenly all this unethical behavior becomes more justified” with these theories, notes Stuart Mills. Because speculators say to themselves: “I let myself be deceived, so it’s up to me to deceive others”.

The recent drop in demand for cryptocurrencies and the resulting drop in prices, however, makes these operations even more dangerous.

“The only buy orders come from these people on Telegram or Twitter,” warns Matt Ranger. So, at some point, without a real demand from lamba investors for the targeted cryptocurrency, “everything collapses,” he points out.

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