Trustees Executors CEO Urges Investors To Be Wary Of ‘pump-and Dump’ Crypto Schemes Promoted By Celebrities

Trustees Executors CEO urges investors to be wary
of ‘pump-and dump’ crypto schemes promoted by
celebrities as prices fall

Investors are
being urged to be wary of potentially misleading
cryptocurrency offers as the popular digital asset class
suffers a big drop in prices.

The first half of 2022
has been bad for the crypto market, with Bitcoin and
Ethereum down more than 50% from their all-time highs in
late 2021.

Ryan Bessemer, CEO of Trustees Executors,
says the global popularity of crypto has seen the rise of
“pump-and-dump” schemes that can mislead investors into
buying artificially inflated tokens.

“It’s
important that Kiwis thinking about investing in crypto
educate themselves about the crypto ecosystem. This also
means being suspicious of schemes that are being promoted by
paying celebrities and social media
influencers.

“Pump-and-dump schemes work by luring
investors to buy tokens at inflated prices under the pretext
of creating the next batch of crypto millionaires. The
people who own most of the tokens sell out, which causes an
immediate fall in the token’s prices. This can drain
assets overnight.”

Mr Bessemer said the creators of
the SafeMoon crypto token is the latest example of an
alleged pump-and-dump
scheme involving A-list celebrities
, including Nick
Carter, Soulja Boy and YouTubers Jake Paul and Ben
Phillips.

“SafeMoon tokens were first sold in 2021
and increased in price by over 21,000% within one month.
However, token holders lost hundreds of millions of dollars
after it was revealed SafeMoon’s founders had falsely
stated their transaction fees would be locked away in a
liquidity pool for several years.

“The price of
SafeMoon tokens dropped by more than 70% after a blog post
revealed that the liquidity pools were not
locked.

“Celebrities such as boxer Jake Paul and
rapper Lil Yachty heavily promoted the SafeMoon tokens on
social media after they were first sold. The latest class
action claims the SafeMoon tokens have no real-world value,
and unlike other crypto assets, half of all tokens are owned
by SafeMoon itself.”

Mr Bessemer raised his concerns
about pump-and-dump crypto schemes in the latest Money
and You
research report, Investing in Volatile
Times
, released this week by the Financial Services
Council.

The report finds 17% of Kiwis are still
investing, or planning to invest, in crypto.

He says
that most experts recommend allocating no more than 5% of an
investment portfolio to cryptocurrencies and highlighted the
importance of taking the time to understand the risks
involved.

“It’s smarter to prioritise more
important aspects of your finances — like saving
up for an emergency
, contributing to your retirement and
paying
off debt
— before investing in crypto. You should only
invest what you’re OK with losing,” he
said.

“SafeMoon is a reminder that cryptocurrencies
are highly volatile and risky assets, even more so than
stocks. Economic and political uncertainty can create even
more volatility in the markets. While Bitcoin and Ethereum
have bounced back after big falls in the first half of 2022,
they’re still a long way from their all-time highs of last
year.”

About Trustees
Executors

Trustees Executors Limited was
established in 1881 and is New Zealand’s oldest
independent Trustee Company. We provide a full range of
financial and trust solutions to individuals, families and
the corporate sector including estate planning, trustee and
investment advisory services.

We are a Licensed
Financial Markets Supervisor and a leading provider of
specialist Corporate Trustee and back-office investment
administration services to some of New Zealand’s largest
financial institutions, banks and fund managers. www.trustees.co.nz

© Scoop Media

 

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