ASIC takes aim at pump and dump groups on Telegram

The Australian Securities and Investments Commission (ASIC) is investigating pump and dump groups on Telegram.

On Monday, an account called "ASIC" posted a message to the "ASX Pump Organization" on Telegram, warning the group's roughly 300 members, "We are monitoring this platform and we may investigate you. "

“Join pumping is illegal. We can see all trades and use trader identities. … You could have a criminal record, including $1M+ in fines and jail time.”

Many members of the group believed the account was fake, but ASIC confirmed to The Australian the validity of the now-deleted message.

While some members of the community laughed off ASIC’s news, others voiced their displeasure at being targeted, as ASIC was not targeting companies and corporate traders.

One member wrote: "What ASIC needs to do is investigate businesses that have been doing insider trading and shorting companies, instead of spending precious time here harassing 300 small investors who have done nothing wrong by sharing stock recommendations or. This has got to be the greatest joke in history.”

On September 23, ASIC issued a warning saying there was a "worrying trend" of social media groups engaging in "blatant" propaganda and pump and dumping. It claimed that "in some cases, posts on social media forums may mislead subscribers by suggesting that such activity is legitimate," before warning that it could be punished by up to 15 years in prison and a fine of more than $1 million .

ASIC Commissioner Cathie Armor said in a release: "ASIC has been working closely with market operators to detect and halt pump and dump activity and we will continue to target actions that threaten the integrity of the market and take enforcement action where appropriate. .”

ASIC does not specifically target cryptocurrency-based pump and dumps, but a spokesperson for the regulator told Cointelegraph:

"This action targets listed stocks, but the messaging is relevant to all financial products, including any crypto asset that may be or relate to a financial product."

The representative added: “Even if the activity involves cryptocurrencies/products that may not be classified as financial products regulated by the Corporations Act, such pump and dumps are of concern as it may result in losses for investors and unnecessary price fluctuations."

Pump and dump organizations have grown in popularity this year following the r/wallstreetbets and Robinhood incidents in January. Admittedly, r/wallstreetbets is more concerned with pumping than selling, and r/wallstreetbets collectively pumped up stocks that hedge funds like GameStop (GME) and AMC Entertainment (AMC) are shorting.

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