These groups that manipulate crypto prices using the old “boiler” technique

In mid-May, the price of the Enzyme cryptocurrency rose sharply before falling, with very high trading volume. A group of speculators enticed many individuals to buy, as they resold 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 make a quick profit.

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

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

“It’s illegal in the stock markets, but criminals are taking advantage of the less stringent regulatory framework for cryptocurrencies,” explains Mircea Mihaescu of specialist Coinfirm.

In the stock market there is also a specific term to talk about this kind of practice: it is the “boiler room” or technique of the boiler. This includes distilling false information (and/or strongly encouraging many individuals to buy a security) to drive up the price of an asset (in which one is already invested) and quickly resell it to gain more value. to earn. New investors, on the other hand, are usually loss-making after buying at the highest. Price manipulation prohibited on regulated markets, but this prohibition does not apply to cryptos.

To scale their action on the Enzyme, the Telegram group’s investors also used a common public social network, in this case Twitter, to encourage other people to invest as well.

“Whales (big investor nicknames, editor’s note) collect a lot of MLN (the abbreviated name of Enzyme in the markets, editor’s note), it’s worth a try,” tweeted one Cryptosanta, for example.

Enzyme Finance, the company that operates the cryptocurrency, tried to calm things down and warned to be wary of “fake accounts” that would suddenly inflate its value. But it was too late and many investors had already embarked on a perilous process: buying and selling fast enough before the souffle fell and demand dried up.

A phenomenon that does not stand alone

Almost all lost because in these schemes it is essential to act very quickly. Indeed, for the Enzyme, the bullish push only lasted a few minutes and the only ones with a chance of not losing money were the initiators of the move. “In all these manipulations, everyone is convinced that he is ‘the one who will benefit from the price increase,’ explains behavioral economist Stuart Mills of the London School of Economics.

The phenomenon does not stand alone. 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 have a strong marketing knowledge.

“You don’t need to know how to write a line of code,” he emphasizes. You just need to know how to write messages that resonate with crypto-asset investors, e.g. taking up the theme of the failure of major economic institutions.

“My Turn to Deceive the Others”

Conspiracy theories abound and some suspect that major US investment funds orchestrated the current demise of cryptocurrencies and then bought them at a good price.

“Suddenly all this unethical behavior is more justified” with these theories, Stuart Mills notes. Because the speculators say to themselves: “I’ve been cheated, so it’s my turn to cheat the others”.

However, the recent drop in demand for cryptocurrencies and the resulting drop in prices makes these operations all the more dangerous.

“The only buy orders come from these people on Telegram or Twitter,” warns Matt Ranger. So at some point, with no real demand from lamba investors for the target cryptocurrency, “everything collapses,” he underlines.

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