Several posts ago, we talked about the importance of not getting suckered in to "paid groups" but mostly focusing on the signal services. It should go without saying - and of particular relevance to crypto anarchism - that you should avoid anyone advertising a group fund to trade on behalf of you. If you're looking for a way to literally give someone your hard earned money for nothing in return, this is the quickest way to go about it.
Only a few months ago, Tone Vays (another crazy guy I'll talk about another time) had to withdraw his relationship with a popular trader by the name of "Venzen" over allegations of exit scamming his paid group. Venzen is a good example of someone who might try to take your money and probably likely get away with it.
- Lives in an exotic location (Thailand or Bali irrc)
- Talks the talk, walks the walk
- Selectively shows stellar returns
- Has clout with other KOLs
The fact of the matter though, is that handing your money over to a non-regulated (and thus zero obligation) financial adviser over the internet, on an asset that cannot reverse it's transactions is a very bad idea. In my entire history being in the crypto space (coming up to 8 years now), I have never encountered an individual who wasn't an accredited financial adviser, that traded your money for you, that didn't end up exit scamming. In-fact, the list of people that have done this is so large that I can't even remember all of them off the top of my head.
There is simply too much incentive to take the money, and there is often little recourse.
Moving on, the final type of group you really don't want to join, is the paid pump group. Oh boy, these groups were popular not just in 2016-2017, but pretty much throughout 2012-15 as well. Whether it was "fontas", "woolong", "coinmarkets", "prometheus" or "bob surplus". Actually many of these were co-tangled and who knows what under the table dealings these crooks had. Pump groups rely on the group volume to prop up shit-coins, pump them, and then dump when the time is right. In addition to paying a membership fee, you also needed to contribute addition Bitcoins for "support."
Little did you know that the pump leader and his little insider circle is already exiting the moment you start buying into the next pump. You see, the way it works is, the leader would go searching for a suitable coin and after a few weeks, he'll announce it to the group. Now, I didn't know this at the time, but obviously life lessons teach you a lot, but the leader often spends these few weeks, accumulating the coin himself. He'll pick something with a very low market cap, and something he can obtain a large amount of the circulating supply without moving the price.
He'll also pick a coin that has plausible fundamentals to support a pump. You know, active development, some what interesting technology / road map, etc.
As soon as he announces the coin to the group, a buying frenzy often happens with most members rushing in to get as much as they can, as cheaply as they can. The problem is, by that point, the pump leader has already absorbed most of the available supply at the lowest prices and so the act of "accumulation" for the rest of the group already causes the price to rise pretty significantly. Here, the leader is already selling off part of his stash at often 100-300% gains to his members.
The problem with pump groups of course, is that, the larger they are, the harder it is for all of the members to secure an exit with profit. Especially given that the leader and his inside circle have already taken up some of the liquidity themselves from their very own members!
In a subsequent post I will go through what it is like being in one of these Pump groups and exactly how they operate. From being a newcomer, to being one of the top dawgs in the inside circle. What it feels like to be the victim of a pump and dump, but also the mastermind behind one.
For now, just take it from me, that you don't want to be anywhere near this kind of group, let alone paying to be in one!