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Viktor Prokopenya Warns About Being Wary of ‘Pump and Dump’ in Cryptocurrency

A number of household names have landed themselves in hot water thanks to their ‘pump and dump’ participation in a potentially fraudulent crypto-based scam; leading many to call for tighter regulations to be imposed on the industry.

Viktor Prokopenya
Viktor Prokopenya

One of those who are leading the calls for tighter regulations is Viktor Prokopenya, founder of and Here Prokopenya details how the crypto industry landed itself in the Wild West of fintech, and how the use of smarter regulations could help it to find its way back to safer ground; to the benefit of the consumer. 

Celebrity ‘pump and dump’ schemes are big news. Reality TV star Kim Kardashian, former NBA player Paul Pierce and boxer Floyd Mayweather have recently been accused of using their fame to hype a new cryptocurrency as part of a scheme to defraud investors, according to court papers filed in California.

Lawyers in the class-action lawsuit claim the trio acted as celebrity endorsers of EthereumMax, or EMAX, which was pitched to investors as a disruptive new cryptocurrency. But those endorsements were a ruse by EthereumMax’s creators to inflate the price of the token, it is alleged.

Celebrity endorsements are everywhere. Take Gametech. Their website says: ‘Gametech invests in ongoing marketing and tie-ins, including celebrity, social media influencer and sports star endorsements and ambassadorships.’

Or more succinctly: ‘At Gametech, we invest in success’. Put like this, there is of course nothing wrong with celebrity endorsement.

Paris Hilton, the original influencer, famously backed crypto with her laser eye meme going viral. In a market, you need to advertise your wares.

Despite all the negative commentary, there is a simple transactional element here – celebrities ‘add value’. In the crypto world where value can be as much about perception as underlying blockchain technology, this is important.

Celebrities add trust, they add glamour, and in the eyes of many, they make something ‘real’.

Celeb-backed assets are therefore inherently more valuable because of these added factors. The level of additional value depends on the celebrity.

So far, so straightforward.

And yet, sometimes – as may be the case with EthereumMax, this crosses a line into a more toxic manipulation. There are accusations that some crypto ‘pump and dump’ schemes are in fact complex Ponzi schemes specifically designed to dupe gullible punters out of their money.

And this is where regulation comes in. I have long been passionate about the need for regulation in fintech. I believe that regulation of crypto can help the market and lead it to a healthier future.

Furthermore, I think that the industry should actively lead the way – and focus on the positive impact regulation can bring.

Why? Because up to now, crypto has been the new Wild West – and if we want to change that and become part of the reputable financial framework, we have to accept that regulation is a necessary part of growing up.

The right regulation can protect consumers, and the industry, from bad practice. It stops conmen or those who seek to profiteer from consumer naivety from tarnishing the whole sector.

Take the case of Binance. It ignored regulation for too long and is now banned in many regions while allegations of tax fraud and money laundering are investigated.

Regulation will come anyway as our industry grows – so let us welcome it. Otherwise, we play into the hands of those who would like to ban financial institutions from dealing in cryptocurrency entirely.

Tech companies learnt this lesson the hard way. They were harvesting data without any limits, leading to GDPR and similar laws. Now, they are subject to an imposed framework and huge fines if they fail to abide by regulations. If tech companies had worked more responsibly with customers’ data and regulators, they could have achieved something more balanced.

Working with regulators is the way forward. This is because, left alone, regulators err on the side of removing freedom. Working with regulators is the key to preserving freedom.

Hiding from this fact is childish and irresponsible towards employees, partners and consumers alike. The trouble with a ‘head in the sand’ approach is that one day you wake up and see that the world has changed without you. Rather than having to adjust, it is far better to shape this shift.

We industry pioneers should act as custodians of the system, preventing its misuse and protecting consumers. Conversely, regulation without the help of practitioners can lead to mistakes and misjudgements, unintended consequences and risks.

We are hardly the first industry that started with no rules. Twenty years ago, only a handful of countries mentioned the word ‘internet’ in legislation. Today most legal systems have adapted to the new connected world. The same will happen with crypto, whether we want it or not. The key is to lead this process and make it good; thus, dialogue, discussion and debate powered by informed opinion is the only way to move forward.

If we look at the case of EMAX, we can see that celebrity endorsement can backfire. EMAX is now plagued by negative headlines, an erosion of trust, and potentially huge losses in court.

The answer to this is for celebrity endorsement to be set in a clear regulatory framework, just as is the case with mainstream financial products. Promotion, yes – but with honesty and clear boundaries, in order to maintain trust and ethical profits.

The marketplace can only benefit from this approach, which will increase consumer and investor confidence, and build a future of which we can all be proud.


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