YoBit Raises Eyebrows with ‘Random Coin’ Pump Campaign
Cryptocurrency exchange YoBit has announced a “YoBit Pump” campaign for October 11th, wherein the platform will buy a series of random coins at an exorbitant price to cause acute price surges. Some pundits in the space have unabashedly decried the scheme, calling it harmful and sure to bring regulators’ ire.
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No Stranger to Controversy, YoBit Seeks Interest Via Market Pumps
On October 10th, crypto exchange YoBit announced a “YoBit Pump” marketing campaign for the following day. While live, the campaign will see the platform conducting buys of “one random coin for 1 btc every 1-2 mins 10 times,” the exchange said.
In effect, the campaign would amount to a series of pump and dumps, a conventional market manipulation technique whereby an asset’s price is arbitrarily inflated so that it can be “dumped” on the market at a higher, and unsustainable, price.
It won’t be the first time YoBit has been caught up in questionable behavior.
In February 2017, the Russian government blocked domestic access to a series of cryptocurrency sites, including YoBit, over concerns of financial fraud and problematic user data practices. In June 2016, the team behind tokenizer play Waves Platform also called out YoBit for a strange, premature launch of a WAVES/BTC trading pair.
The pump campaign also comes amid increased contemporary scrutiny on manipulative market practices in the cryptoverse, particularly in the United States.
Back in May of this year, the U.S. Department of Justice and the U.S. Commodities Futures Trading Commission launched an investigation into potential cryptoeconomy manipulators. In June 2018, the CFTC launched another probe into four cryptocurrency exchanges in a bid to bust manipulative traders. The commission started offering bounties for information leading to the busts of crypto pump and dump groups in February 2018.
Bringing the Wrong Kind of Attention
Some in the cryptocurrency ecosystem wasted no time in panning the YoBit Pump, arguing the move was set to be damaging for the space.
Typifying that line of argument was the response of Matt Odell, co-host of the Rabbit Hole Recap segment of the popular Tales from the Crypt podcast, who noted earlier on Twitter the campaign’s unprecedented nature, the likelihood it would ramp up regulators’ attention and “hurt retail users,” and its vulnerability to insider trading.
(1) I think this is a first. An exchange announcing a planned pump for marketing purposes.
(2) So many problems with this. The big one is insiders know which coins they will pump.
(3) Will draw increased regulator scrutiny.
(4) Will hurt retail users.
(5) Don't use Yobit. https://t.co/tfusb5R5r2
— Matt Odell (@matt_odell) October 10, 2018
“Don’t use Yobit,” he concluded.
However some risk-averse speculators surely will — though it’s also equally inevitable that every pump ploy has as many losers as it has winners. Maybe even more losers, abstractedly speaking, considering the reputational and regulatory stakes at hand in the contemporary cryptocurrency industry.
What’s your take? Do you think this kind of promotional campaign is fair game or an ethical breach? Let us know where you stand in the comments section below.
Images via Pixabay, Twitter, YoBit