Arunabh Chakravorty
[Disclaimer: This Article does not encourage people to trade or invest in any sort of Cryptocurrencies, rather the opposite. It is illegal in Bangladesh under the Foreign Exchange Regulation Act 1947; Anti-Terrorism Act 2009; the Money Laundering Prevention Act 2012. The Josephites’ Mirror family strongly suggest their reader not to trade, invest or hold any sort of cryptocurrency. This article just behold the lesson of “Pump and Dump”]
According to Investopedia,” A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.” In the past few years, we have seen so much hype in the cryptocurrency world abroad. Many people just think Cryptocurrencies are like lotteries. If you invest you are bound to get rich. For these reasons in this sector, there are a lot of inexperienced investors or people with little to no financial literacy. And some money sharks try to exploit this inexperience. In Bangladesh, many inexperienced investors want to trade in cryptocurrencies but they don’t know the other side of the coin(a.k.a the dangerous sides). It is indeed “harder” to counterfeit transactions due to its blockchain technology. But there are parties with artificial names who conduct these transactions, where there is a high risk of breaching the laws related to money laundering. Also as in the Stock Market where there is respective regulation to monitor irregularities(i.e Security and Exchange Commission), in the crypto world, there are not many regulations and that's why we can notice big bubbles growing and bursting. One of the recent notable scams is the “Save the Kids” token scam. From Pumping Money with the publicity of a famous online celebrity to dumping the money within days, this is the story of “Save the Kids”.
What is “Save the Kids”?
According to Investopedia Crypto Token means, “The term crypto token refers to a special virtual currency token or how cryptocurrencies are denominated”. They are their virtual currency with their blockchains. And that is basically what “Save the Kids” was a virtual token. But the marketing point was they are going to donate to a charity. This message was spread with the hands of famous YouTuber, twitch streamers, esports players etc. The notable ones are Ricegum, FaZe Clan Member:- Frazier Kay, Jarvis Khattri, Nikan Nadim, and Teeqo etc.
If anyone took a closer look at the “Save the Kids” logo, it is eerily closer to the oldest charity “Save the Children”. There are several red flags on their way in investment but they blindly trusted because of the referral of their favourite online celebrities. Some investors thought the token would rise to the top or investors with little to no financial literacy but still invested due to the hype. This is more true for the underage investors who invested through their parents or legal guardians money.
What is “Pump and Dump”?
According to Investopedia, “Pump-and-dump is a manipulative scheme that attempts to boost the price of a stock or security through fake recommendations.” So in simple words Pumping is to boost up the price of any stock or security, in this case, a Crypto Token with fake but a person with “huge” accountability. In this case, the online celebrities played the role to pump the price of the stock with huge recommendations to their audiences. How the dumping case works is the person with the most securities holder can increase the price with pumping and then sell all of it, which will plummet the price of security or token.
In the case of “Save the Kids” Token, within 1 day it got half a penny rise with each stock thanks to the marketing and taking the volume to almost $600,000 but afterwards nothing but disappointment. The line went nothing but down with a 60% fall in price. This downtrend indicates a motivated or planned manipulation. And thus written in the history of Cryptocurrency another bubble, the “Save the Kids” bubble.
Conclusion:
FaZe Clan removed the 4 alleged members involved with the case. Investigations are going around and if proved guilty the alleged members can go behind bars. But due to Cryptocurrency’s nature of anonymity is harder to trace back transactions, oftentimes many crimes happen without giving justice due to this. This story gives us the lesson of ”Pump and Dump” because it happens not only in the Crypto world but also in other financial activities. Of Course, things like Stock Exchange have regulations like Security and Exchange Commission to monitor such irregularities but once lost can be hurtful, so learn the basics of 101 financial literacy
[This is solely based on my comprehension and understanding of this topic. I am no expert and lack enough experience. If you find any information or my opinion incorrect, please let me know (in the comments) in kind words.]
Reference:
https://www.insider.com/faze-clan-save-the-kids-cryptocurrency-scam-controversy-2021-7
https://coinmarketcap.com/currencies/save-the-kids/
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