Crypto Scheme Evolution: Market Pumping and Bubble Risks

While waiting for a market rally, players in crypto venture capital have introduced a new Ponzi-like scheme aimed at large capital gains through pump-and-dump actions involving stocks and tokens. **How the scheme works:** In 2017, everyone was trying to include "crypto" in the name to catch a pump. Now, the scheme has evolved to include public companies and institutional investors, disguising speculation as "long-term development strategies." • Any company is selected, whose reserves are then used to buy cryptocurrencies as assets. • When the market grows, the capitalization of the holding also increases, offering potential returns to shareholders. • FOMO-driven insiders make additional stock purchases, and the scheme enhances investments. In the end, everyone benefits from such a pump: shareholders profit from stocks, the company earns through commissions and crypto, and the market gets its share of hype. However, this pathway has a significant fork: more companies are taking loans to buy crypto tokens to boost capitalization. While buying Bitcoin or Ethereum is normal, purchasing tokens like Pyth into treasury could signal market bubbles similar to FTX in 2022. **Live examples include:** - Several firms collectively sold ETH worth $420 million and used the same funds to buy Sharplink shares, which doubled in value over a few months and are gradually being sold off. The good sign is that Sharplink itself started to buy ETH on balance. - Galaxy Digital allocated $450 million to Mill City to buy SUI tokens. It’s unclear whether the tokens are from the team or investor lockups or from unlocked tokens on the spot market. News of these purchases led to a 15% dump from local highs. Long-term investors might be hedging against tokens with poor outlooks or these could be marketing moves. In any case, it’s wise to monitor such news across various tokens to identify promising short candidates and potentially clean your portfolio earlier than others. **For you:** money, knowledge, exchange. @theVSЁ