Dutch central bank to implement MiCA regulations by year-end, infographic warns investors about Pump and Dump

The Dutch Authority for the Financial Markets (AFM) recently issued a strict order prohibiting cryptocurrency businesses from artificially inflating prices and then dumping large quantities to manipulate the market. The AFM will implement the Markets in Crypto-assets Regulation (MiCA) on December 30, 2024, with the aim of enhancing market transparency, increasing investor protection, ensuring market stability, and taking enforcement actions against similar behaviors. In order to fully enforce the MiCA regulations, the AFM has investigated three related cases, analyzing how price fluctuations can be manipulated through social media, while also reminding consumers to exercise caution.

The Dutch Government Dismantles Pump and Dump Scheme, Warning Cryptocurrency Traders

The Dutch financial authority explained the common practice of Pump and Dump in the cryptocurrency market in four steps:

1. The initiator of the Pump and Dump scheme selects a cryptocurrency and platform, then secretly buys a large amount of coins at a low price.
2. They spread words like "Let's fucking go," "FOMO," or "to the moon" on social media to hype up the price, promising users high returns of up to 800% and even involving celebrities.
3. Users who are attracted to this scheme buy in large quantities, causing the price to gradually rise.
4. Once the price reaches a certain high point, the issuer sells off the coins to make huge profits, leaving the cryptocurrency worthless and the investors with no returns.

The AFM stated, "We are concerned about this prevalent form of market manipulation. Pump and dump schemes will soon be prohibited, and preventing and detecting market abuse is AFM's top priority. Only with sustainable trust in the industry can the benefits of digital innovation based on cryptocurrencies be realized. Therefore, we take this opportunity at this stage to warn both the initiators and consumers of pump and dump schemes."

Despite the global regulatory efforts to oversee crypto assets, scams are still rampant, and investors should remain cautious.

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