The “pump and dump” scam is a classic stock trick.
Someone ruthlessly promotes a stock they hold, driving up the price based on artificial interest, and then sells before everyone realizes the interest was just manufactured.
Oftentimes, those stocks are “penny stocks,” which don’t trade on an exchange and are worth only a few cents a share.
Real life “Wolf of Wall Street” Jordan Belfort was famous for perfecting the pump and dump to the tune of millions of dollars for himself and his posse.
But on Friday a new cadre of penny stock villains struck, this time on the popular messaging app WhatsApp.
I first noticed the scam when a friend of mine posted this screenshot on Facebook along with the caption, “Umm…What? Someone got the serious wrong number on Whatsapp.”
But I didn’t put the pieces of the scam together until The Awl’sJohn Herrmanpointed out that the spam seemed to be part of a coordinated pump and dump scheme.
AVRN is the stock sign for Avra, Inc., which is a digital currency (think Bitcoin) company.
And the scam seems to have been dastardly effective. As you can see from this chart from Yahoo Finance, the stock for Avra shot up at around 11 a.m. before crashing shortly thereafter:
- Yahoo Finance
Some people were clearly fooled, and assuming the scammers timed it right and didn’t totally bungle the operation, they probably made some cash.
This isn’t the first time that potential pump and dumpers have used an innovative messaging medium to cut through the noise.Last month, Twitter shares spikedbased on a phony report on awebsite made to look like Bloomberg.com. The story had said that Twitter was fielding an offer to be taken over for $31 billion.