WHY ARE CRYPTOCURRENCIES VULNERABLE TO PUMP-AND-DUMP SCHEMES IN EUROPE?
Jorge E. Constantino Torres
Master candidate in International Technology Law at Vrije Universiteit (VU) Amsterdam, The Netherlands., NL
Jorge Constantino is currently a Master candidate in International Technology Law at Vrije Universiteit (VU) Amsterdam, The Netherlands. In 2015, he graduated as a Bachelor of Laws from Queensland University of Technology (QUT), Brisbane, Australia. Since, he has worked in legal practice in Australia and currently works as a sessional academic teaching Law at Queensland University of Technology (QUT).
Cryptocurrency is a digital exchange medium stored in the Distributed Ledger Technology (DLT) and form the basis for the term crypto-assets. This paper focuses on the group of cryptocurrencies (or crypto-assets) that belong to Public Permissionless Blockchains and explains historical pump-and-dump, and how this old scheme appears to be applied now to cryptocurrency trading. This work explores the nature of the blockchain ecosystem, where cryptocurrencies exist, and proposes that ironically the encryption and immutability nature of the blockchain make cryptocurrencies vulnerable to pump-and-dump schemes. The lack of adequate regulation in Europe leaves cryptocurrencies vulnerable to pump-and-dump schemes causing an overall effect of vulnerable consumers expossed to fraudsters. Cryptocurrency pump-and-dump also affects investors, the development of cryptocurrencies, and the blockchain itself.