A joke cryptocurrency Dogecoin (DOGE) grew nearly twice its value within a few days after the pumping challenge on social media platform TikTok went viral.
The number of trades done with the popular Shiba Inu meme-coin Dogecoin shot to the moon within the last few days after the video inviting people to pump up the coin went viral on Tik Tok social media platform.
The coin, which traded at a price of $0.0023 for quite some time recently, went wild since June 6, bringing the price to the levels of $0.0044 on June 8. According to the data of CoinGecko, the trading volumes spiked respectively, from around $70 million on Monday to $197 million on Wednesday.
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The craze sparked after TikTok user James Galante posted a video, inviting for a challenge to invest in Dogecoin and get rich when the coin’s price will hit $1.
The video invited TikTok users to invest $25 in Dogecoin and wait until its value rises from $0.0023 to $1, which would result in a profit of $10,640 if everything went according to a plan. As the video stated:
Let's all get rich! Dogecoin is practically worthless. There are 800 million TikTok users once it hits $1, you'll have $10,000. Tell everyone you know!
The challenge that encouraged the pump of Dogecoin went viral among the 800 million TikTok audience and got nearly half a million views and 62.6 thousand likes at the time of publishing.
The price of DOGE grew nearly 100% since then. The virtual currency with the biggest circulating supply of over 125 billion coins is currently ranked 27 by market capitalization of $514 million, according to CoinMarketCap.
Market manipulation opinions
The viral video and its rampant effect on Dogecoin’s price sparked a discussion of speculation and pump and dump market manipulation.
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Pump and dump is the illegal promotion of any digital or traditional asset that the investors hold and plan to sell once the asset’s price has risen enough due to the increased demand, caused by the manipulative endorsement. The illegal attempts to boost the price of the asset are mainly based on false and misleading recommendations or falsified and heightened statements.
According to financial analyst Phillip Christenson, however, the current Dogecoin pump is nothing more than a scam, which is possible due to the non-existent U.S. Securities and Exchange Commission (SEC) regulation on cryptocurrency markets. As he commented to popular tech magazine Gizmodo:
The SEC does not regulate the cryptocurrency markets, although this could change in the future, and likely will, as we see more scams like this.
He added further that SEC could take down a few of more popular influencers that are exploiting such types of pump and dump schemes as a warning to others that contemplate something similar. However, a mass takedown is “unlikely and very nearly impossible”, he concluded.
In the meantime another analyst and financial portal Insider Monkey editor Meena Krishnamsetty told the magazine, that Tik Tok’s Dogecoin pumping challenge is not a traditional pump and dump scheme:
The SEC does not regulate the cryptocurrency markets, although this could change in the future, and likely will, as we see more scams like this.
According to her, there still is a possibility that experienced professionals have been playing with amateur buyers and traders by inflating the assets’ price by exploiting the belief of them being undervalued. Braden Perry, regulatory and government investigations attorney supports the opinion
The opinion got the support from regulatory and government investigation attorney Braden Perry, who concluded that the recent scam is “the new version of an old scheme like boiler room phone calls and direct mail campaigns and message boards for penny stocks, except on TikTok steroids.
