Altcoins especially the smaller, newer projects unfortunately have a history of price manipulation and pump and dump schemes. Various issues have been reported by cryptocurrency transparency websites and various exchanges have been accused of aiding and abetting in pump and dump schemes.
In a latest accusation, Binance, the world’s largest cryptocurrency exchange based in Hong Kong, China has been accused of being complicit in a pump and dump scheme of Ethereum-based payment system’s token MATIC. MATIC itself has rejected the claims of price manipulation as baseless but it was Binance’s response that got more attention from the crypto community.
On December 10, MATIC lost more than 60% of the overall value of the token in a big crash that has raised serious question marks from around the industry. According to the data from cryptocurrency market cap website coinmarketcap.com, MATIC/BTC trading pair reached the highest of 562 satoshis on Monday 9 December 2019 but eventually dived to just 195 satoshis afterwards which means the value of the coin dropped more than 65% in just one day’s trading. Eventually the price recorrected and came back to the 200 satoshi mark on Tuesday, but the strange behaviour of the cryptocurrency’s market value on Monday was suspicious.
Binance also got involved in the scandal and CEO Changpeng Zhao popularly known as CZ had to get involved himself and clear the air. He said on Twitter:
Our team is still investigating the data, but it’s already clear that the MATIC team has nothing to do with it,
CZ has passed the buck on MATIC’s other whales who possibly dumped the coin’s value. MATIC’s incubator is based in the Binance launchpad and has received considerable support from the cryptocurrency exchange platform before. MATIC was one of the first coins to raise funds on Binance as part of the new growing trend of Initial Exchange Offerings (IEOs).
But, as in case with many hyped small crypto projects, MATIC initially lost value after the fundraising but then dramatically appreciated in the second half of the year to record price index before tanking tremendously. Experienced traders have always warned users not to buy into an explosive green candle because of FOMO because of past pump and dump schemes operating in the sector.
While Binance has come forward and defended MATIC and its founders, it is safe to say that further projects from the Binance incubator will have more scrutiny from the crypto community because of these allegations.
Featured image source: pixabay.com
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