Pump-and-Dump Scheme on Telegram: Four Plead Guilty in Australia

Four individuals in Australia have pleaded guilty to operating a coordinated pump-and-dump scheme on the encrypted messaging platform Telegram. They now face a maximum prison sentence of 15 years for conspiracy to commit market rigging, along with fines of up to AUD 1 million.

A Coordinated Scheme to Rig the Markets

Announced today (Tuesday), three of the individuals rigged the market between 28 August 2021 and around 22 September 2021, while another participated in the fraudulent scheme between 17 September 2021 and around 22 September 2021.

The guilty pleas came almost a year after the Australian Securities and Investments Commission (ASIC) criminally charged the four with manipulating the prices of Australian stocks. They had formed a private group on the Telegram app, where they discussed and selected penny stocks to promote to the public. The Telegram group was called the ‘ASX Pump and Dump Group.’

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Over three weeks in September 2021, nine announcements were made in the Telegram group to boost the stock prices of selected 'target' stocks.

The perpetrators bought the target stock before making the pump announcement, intending that the promotion and subsequent public purchases would drive the share price to an artificial level. They then sold their holdings once the stock price had significantly increased.

“ASIC takes breaches of the market manipulation rules very seriously and, as demonstrated in this matter, we will not hesitate to take enforcement action where appropriate,” said ASIC Chair Joe Longo.

Telegram’s Encryption Facilitating Fraudsters

Meanwhile, Telegram is facing scrutiny from multiple governments worldwide due to the rise of fraud and scams on the platform. Recently, Vietnam, a Southeast Asian country with a population of over 100 million, blocked access to Telegram for failing to cooperate with local authorities in addressing crimes carried out via the messaging app.

According to Vietnamese authorities, more than 13,000 victims were defrauded of over VND 1 trillion (US$38 million) through scams conducted on Telegram. Additionally, the personal data of 23 million people was reportedly sold illegally through the app.

Moreover, Russian forex brokers also ended customer support via Telegram following the enforcement of a new domestic law prohibiting financial institutions and government bodies from using foreign messaging platforms for communication.