The Australian Securities and Investments Committee (ASIC) has revealed the details of how it took down crypto "pump and dump" Telegram groups back in October.

A pump-and-dump scheme typically involves using social media to coordinate users to buy large amounts of a thinly traded token to inflate its price artificially. They then cash out with massive gains afterward other investors, who aren't in on the scheme, succumb to FOMO and buy in on a momentum trade.

The new documents reveal that the ASIC has been taking counsel from finance academic and crypto researcher Talis Putnins since early October.

A 38-slide presentation by Putnins to ASIC investigators revealed that pump-and-dump schemes are cyclical, peaking back during 2022 and once again in 2022. The presentation stated that they tend to "correlate with overall market sentiment and prices."

Pump-and-dump schemes are cyclical, peaking in 2022 and again in 2022. Source: Presentation to ASIC by Professor Talis Putnins

Co-ordinate to the presentation, several factors take changed betwixt 2022 and the fourth dimension of publication, during Oct 2022. Over a period of six months in 2022, Putnins documented over 355 cases of crypto market manipulation.

He referenced the schemes' "transparent intention to pump" and the absence of whatsoever "18-carat try to ignite momentum." The schemes are "completely out in the open for everyone to see," the presentation noted.

The presentation detailed the Telegram grouping "Crypto Binance Trading | Signals & Pumps" Sept. 19 pump of fractional algorithmic stablecoin system, Frax Share (FXS), which saw a massive 90% on $65 one thousand thousand volume in less than one minute.

The outcome of the September FXS pump was a ninety% price increase in less than one minute. Source: Presentation to ASIC past Professor Talis Putnins

"With our volumes averaging 40 to 80 meg $ per pump and peaks reaching upwards to 450% we are set up to denote our side by side large pump," stated a Sept. xiii declaration in the group.

"Our chief goal for this pump will be to brand sure that every single member in our group makes a massive profit. Nosotros volition also endeavor reaching more than than 100 million $ volume in the first few minutes with a very high % gain."

What's backside pump-and-dump schemes?

The presentation cited a perceived lack of legal risk, anonymity in forums and encryption as potential reasons for the groups, adding that there is a "perception that crypto is unregulated therefore pumps are legal."

The new information was revealed in documents that The Australian newspaper was able to access through a liberty of information request. The Australian published the new information on Tuesday.

Final year, Putnins co-authored a paper titled "A New Wolf in Town? Pump-and-Dump Manipulation in Cryptocurrency Markets."

The report concluded that crypto pump and dumps take created "extreme price distortions of 65 per cent on average, abnormal trading volumes in the millions of dollars, and large wealth transfers between participants."

Related: ASIC targets pump and dump Telegram groups

On Oct. fifteen, Cointelegraph reported that ASIC had been investigating schemes across crypto and traditional markets operated through social channels such as Twitter, Telegram and Aussie stock chat forum HotCopper.

At the time, a Telegram account named "ASIC" posted a bulletin on the "ASX Pump Organisation" chat warning its 300 members that the watchdog was "monitoring this platform" and that its members were being investigated.

"Coordinated pumping of shares for profits tin be illegal. We tin can come across all trades and accept admission to trader identities. [...] Y'all run the adventure of a criminal record, including fines of more than $i million and prison time."
Screenshot of an announcement in the ASX Pump Organisation Telegram conversation from ASIC. Source: Presentation to ASIC by Professor Talis Putnins

A spokesperson from the ASIC told Cointelegraph at the time: "Even where the activity relates to cryptocurrencies/products that may not be financial products nether the Corporations Act, the pump-and-dump exercise is concerning, every bit information technology can atomic number 82 to investor losses and create unnecessary price volatility."