Financial authority says market abuse using crypto is “widespread” 

Abuse of the market with cryptocurrencies is “widespread,” according to the Dutch Authority for the Financial Markets (AFM). Groups of investors can artificially inflate the value of cryptocurrencies and then sell them off again at a significant profit.

Crypto investors can be significantly duped by the so-called “pump and dump” practice, according to the AFM. This form of market manipulation will be banned under the new crypto law from December 30. In anticipation of this, the AFM has conducted an investigation into how the abuse takes place.

Initially, many cryptocurrencies are bought for a low price. Messages about the crypto are then spread, promising astronomical financial returns. So-called “finfluencers” are often used for this, which is a combination of the words financial and influencer.

These messages lead to the crypto rising quickly in value so that they can be sold at a higher price. The other investors are then left behind with a more or less valueless crypto coin and a significant financial loss.

“We are concerned about this widespread form of market manipulation,” said AFM director Hanzo van Beusekom. “The possible benefits of digital innovations based on crypto can only be fully realized when there is a sustainable trust in the sector.”