Trustees Executors CEO urges investors to beware of “pump-and-dump” crypto schemes promoted by celebrities as prices fall
Friday, August 19, 2022 at 9:02 am
Investors are urged to beware of potentially misleading cryptocurrency offerings as the popular digital asset class suffers a sharp price drop.
The first half of 2022 has been bad for the crypto market as Bitcoin and Ethereum have lost more than 50% from their late 2021 all-time highs.
Ryan Bessemer, Chief Executive of Trustees Executors, says crypto’s global popularity has led to a rise in “pump-and-dump” schemes that could lure investors into buying artificially inflated tokens.
“It is important for Kiwis who are considering investing in crypto to educate themselves about the crypto ecosystem. It also means being suspicious of programs promoted by paying celebrities and social media influencers.
“Pump-and-dump schemes work by enticing investors to buy tokens at inflated prices under the guise of creating the next batch of crypto millionaires. The people holding the most tokens sell out, causing an immediate drop in token prices. This can drain assets overnight.”
Bessemer said the creators of the SafeMoon crypto token are the latest example of an alleged pump-and-dump scheme involving A-list celebrities, including Nick Carter, Soulja Boy and YouTubers Jake Paul and Ben Phillips .
“SafeMoon tokens were first sold in 2021 and increased in price by over 21,000% in a month. However, token holders lost hundreds of millions of dollars after it was revealed that SafeMoon’s founders falsely stated that their transaction fees would be locked in a liquidity pool for several years.
“SafeMoon token price fell more than 70% after a blog post revealed liquidity pools were not locked.
“Celebrities like boxer Jake Paul and rapper Lil Yachty heavily promoted the SafeMoon tokens on social media after they were first sold. The latest class action lawsuit claims that the SafeMoon tokens have no real value, and unlike other crypto assets, SafeMoon itself owns half of all tokens.”
Bessemer says that most experts recommend investing no more than 5% of an investment portfolio in cryptocurrencies, stressing the importance of taking the time to understand the risks involved.
“It’s wiser to prioritize more important aspects of your finances – such as B. to save for emergencies, contribute to your retirement and pay off debt – before investing in crypto. You should only invest what you can lose,” he said.
“SafeMoon reminds that cryptocurrencies are highly volatile and risky assets, even more so than stocks. Economic and political uncertainty can add even more volatility to markets. While Bitcoin and Ethereum have rebounded from major declines in the first half of 2022, they are still a long way off their all-time highs of last year.”
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