Leon: Okay let’s say you want to do the opposite. Let’s say you want to do a pump and dump; how would you do that? Let’s say you want to drive the price up, what would you do?
Tai: If you want to drive the price up, you just come in and buy it up?
Leon: No, that’s not what you do. That just means you’re just paying a higher price. No, that’s not what you do. Do you know what a pump and dump are? How do a pump and dump work?
Tai: Where they run the price up and have a sell order ready?
Leon: Okay, but you have to have something to sell first? What you do is you accumulate over time, so you don’t move the price up, take a while, get your position in. And then the next step you do is you get the price running, and then you get the FOMO traders to jump in… the momentum guys and the FOMO guys start jumping in with you. And then you drive the price 4 times 5 times 6 times, you know you drive it as high as you can go.
Tai: Yeah because it’s not a very liquid market so it doesn’t take that much money. You can buy into it and then drive the price up.
Leon: Yeah, exactly. And then when it hits the top, and remember the Litecoin pump and dump that happened last summer, like when it ran up to like 8 bucks or something like that.
Tai: I don’t remember it, but you know, I mean…
Leon: Okay, well, if you pull up the BitcoinWisdom and pull up the USV chart, it’s right there. So it was a Ponzi scheme in China and literally, they didn’t even hide the fact that it was a Ponzi scheme. In fact, they even said that ‘This is a Ponzi’. And still, a bunch of Chinese people bought into it, because they explicitly said ‘We’re gonna take your money and pay off the previous investors and you’ll get paid by the next investors’, and I said ‘This is a Ponzi scheme’. I don’t know if it is a fraud if you tell people it’s fraud.
Tai: I don’t think, I mean, I don’t see how it can be a fraud if you’re telling people what you’re doing.
Leon: Yeah, exactly! You know, and they said that ‘Okay, so we’re going to do this ‘Ponzi scheme’ and send your Litecoin to this address’. And that address, eventually, you can even look up that address, something like 30% of the Bitcoins in existence went through that one address.
That was what happened. It had a run to 8, I think it hit 8 bucks before it finally crashed. But that’s how you manipulate the market. It’s not part of, like, if you’re Poloniex and you’re trying to manipulate the price of Ethers then you’ll go DDoS it.