Legislation of Pump and Dump method

Many sources call Pump and Dump a scam, but that's not entirely true. On the one hand, the scheme could be called a scam if it was intended to mislead and deceive users. But here the point is different. Pump and Dump have signs of a pyramid, but another analogy can also be drawn - an accelerated wave cycle. Here, too, the bubble inflates, the "hamsters" try to jump into the last wagon of a departing train, the whales dump their coins, and the price drops. Only if the dot-com or mortgage bubble has been inflating for months, in Pump and Dump everything can happen in a matter of hours.

The question of whether the Pump and Dump strategy complies with the law is ambiguous for several reasons:

How do you prove individual collusion? After all, collusion to manipulate the price is indeed a violation of the law. Price movement for fundamental reasons is not.

How do you identify the organizers? If regulated markets have no problems with this, then the cryptocurrency market is actually unregulated and anonymous.

What measures should be taken against violators? Pumps organizers are citizens of different countries with different laws. The legal world machine is sluggish and physically unable to respond to all cases of Pumps.

The regulators have a negative attitude toward pumps. But they can't do anything about it. In late 2021, the Australian regulator ASIC attempted to infiltrate one of the major telegram channels. But all it succeeded in was getting the channel shut down and threatening the organizers with fines.

The situation is similar for cryptocurrency exchanges. Large exchanges care about reputation and they have enough commission from the turnover of top coins. That's why they don't hurry to add coins from below TOP-1000 with a cent value. Coins, which are the target of pumpers, are listed on small exchanges. And those exchanges turn a blind eye to price manipulation. And if large exchanges have technical mechanisms against pumpers (for example, minimum restrictions on the step of cryptocurrency quotation change), then small exchanges support pumpers on the contrary.

From the legal point of view, Pump and Dump can be considered fraud with a stretch. This is more of an ethical and moral question.

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