The first measure against pump and dump fraud is here

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The American Commodity Futures Trading Commission (CFTC) has announced its first crackdown on the infamous cryptocurrency scam. This was done through civil fines and penalties, as well as restraining orders and injunctions.

In a statement released Monday, July 18, 2022, the CFTC announced that United States District Court Judge John Koeltl for the Sixth Circuit in New York has granted an injunction and an injunction unanimously, as well as a civil penalty and the right to damages and interests. against Jimmy Gale Watson, Jr., who allegedly defrauded hundreds of people with John McAfee, who died last year.

According to the CFTC, Gale Watson Jr. worked with McAfee on a scheme that was flagged as a scam in March 2021. According to the agency, they both hid their financial circumstances and advertised “fraudulently” for eton on social networks. Media as a long-term investment that was subsequently sold for over $ 2 million in profit, according to the CFTC.

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For this, Gale Watson Jr. must return “all program benefits” in full. In addition, he will have to pay a civil penalty of the same amount. Furthermore, it is forbidden to trade in derivatives markets and to register with the CFTC.

What is pumping and draining?

Pump and Dump is a system where scammers spread false information about a particular asset to lure investors and inflate its price. The scammers then liquidate or freeze the asset at an artificially inflated price before the price goes down, keeping the assets in question for themselves.

This type of scam began in 2018 with the advent of Initial Coin Offerings (ICOs). At the time, there were numerous reported cases of projects disappearing without a trace after raising thousands of dollars from investors, which attracted the greatest attention from regulators.

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According to the US government agency CFTC, this is a “fraudulent and manipulative” scheme that can be “worse” when it targets “weak” retail investors, often lured by malicious actors who promise “get rich quick”. Since 2018, a government agency has denounced the existence of such systems.

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