I was once revered in the cryptocurrency world as 'the Xu Xiang of Cryptocurrency', managing over a hundred tokens. At my peak, the value of the cryptocurrencies I managed reached hundreds of billions of RMB, with a dedicated team of order issuers numbering over a hundred. Now, I choose to come forward and share this experience to help everyone see the truth of the cryptocurrency world; it is far from glamorous, and is more about darkness and bloodshed.
Initial Exposure to Cryptocurrency, Catching a Glimpse of Huge Profits
I originally struggled in the traditional investment field, accumulating a certain level of experience and connections. By chance, I came into contact with the cryptocurrency world. At that time, Bitcoin's price was soaring, and various cryptocurrency projects were emerging like mushrooms after rain, with wealth creation myths being heard everywhere. Watching some people around me become wealthy overnight in the cryptocurrency space, I felt my internal balance begin to tilt, ultimately deciding to dive in.
Initially, I just dipped my toes in, investing in some mainstream cryptocurrencies, and unexpectedly received several times the return in just a few months. This sweet taste led me to firmly believe in the wealth effect of the cryptocurrency market. As I delved deeper into the cryptocurrency world, I discovered an even more lucrative 'business'—token value management, which, in simple terms, is market manipulation.
Building a Team, Starting the Market Manipulation Journey
Market manipulation is not an easy task; it requires a professional team. With resources I accumulated before, I formed a team of professionals including strategists, order issuers, and analysts. The strategist is responsible for formulating trading strategies, the order issuers execute trading instructions, and the analysts analyze market trends and projects.
Our first business deal was to help a blockchain project with token value management. The project team provided us with an account containing 50 million worth of Bitcoin and 50 million worth of smaller tokens. Our task was to increase the account's asset value within three months through manipulation. According to the usual practice, our compensation would be part fixed fee and part profit sharing. If the account's assets appreciate after three months, we would receive 30% of the appreciated portion.
Revealing the Secrets of Market Manipulation Processes
Token Lockup and Chip Control
During the private placement financing stage, the project team will implement lock-up operations. For example, the project team sells 20% of the tokens at a unit price of 1 yuan/token, exchanging for 20,000 ETH. However, this 20% of tokens will not be fully released to investors at once, but will be split. Of the 20% of that 20%, which is 4% of the total, will be released initially, while the remaining 16% will be released after three months. In the early stage, only 4% of the circulating supply will be available in the market, while we hold a large amount of funds and tokens, allowing us to easily control the token price.
Washout: Making Investors Desperate to Exit
Washout is one of the key steps in market manipulation. We will conduct frequent buying and selling operations within 7 days to create significant price fluctuations, allowing private investors to make a small profit first, and then a small loss, inducing panic. For example, at the opening, we will suddenly raise the price during low trading volume at midnight, then quickly crash the price, causing it to drop several levels, giving the impression that the bottom is not in sight. Next, we will let the price stabilize for a period, usually at least 3 days. During this process, many investors cannot bear the price fluctuations and the agony of sideways movement, and will choose to sell their tokens. Through such operations, we can clean up the floating chips in the market, reducing pressure for the subsequent pumping.
Pump: Creating the Illusion of Wealth
Once the washout is complete, we enter the pumping phase. When the circulating supply is well-controlled, we will directly use our own funds to pump; if the circulating supply is large, we will borrow additional funds to assist with the pumping. The key in cryptocurrency pumping is urgency; we need to quickly push the price to a high point and then immediately let it drop. Because when the market fluctuates sharply, investors often hesitate to sell, and they tend to sell only during sideways movements. Through this method of dramatic price swings, we can attract more investors' attention and encourage them to follow our buying actions with relatively less capital consumption.
Selling Phase: Harvesting the Last Wave of Profits
After the pumping phase comes the selling phase. At this stage, we need to sell 80% of the tokens we hold. The price curve does not decline linearly; each high point is lower than the previous one, and each low point is also lower than the last, with increasing volatility. The benefit of this approach is that it makes retail investors mistakenly believe that the price is bouncing back from the bottom, thus attracting them to buy in. During this process, we gradually transfer our tokens to retail investors, completing the final harvest.
Disorder in the Cryptocurrency Market: Mutual Attacks
In the cryptocurrency market, beyond the competition between market manipulators and retail investors, there is also fierce competition among exchanges, project teams, and private investors. Generally, the exchanges, project teams, and private investors unite to collectively harvest retail investors. When the number of retail investors sharply decreases, and there are not enough 'chives' to cut, a downward killing pattern emerges, where exchanges attack project teams, and project teams attack private investors.
The means by which exchanges attack project teams are numerous, such as using project teams' deposits for speculative trading, borrowing tokens out of thin air, and prohibiting withdrawals. Project teams are often in a weak position in front of exchanges, as exchanges are the rule-makers. Conversely, project teams attack private investors mainly by manipulating token prices, making private investors buy at high prices, and then crashing the price, leading to total losses for private investors.
Approaching the End: Reflection and Warning
As regulations in the cryptocurrency market become increasingly strict, our market manipulation business is also becoming more difficult. Some projects are being investigated for illegal fundraising and fraud, and we have been implicated as well. The once glorious team ultimately crumbled.
Reflecting on this journey of market manipulation, I am filled with regret. The cryptocurrency market may appear to be a wealth paradise full of opportunities, but in reality, it is a massive casino, rife with fraud, manipulation, and unfairness. Here, the true profits go to a small number of manipulators and behind-the-scenes operators, while most ordinary investors are the ones being harvested.
I hope that through my experience, I can provide a warning to those still in the cryptocurrency market or those considering entering it. Don't be fooled by the wealth creation myths in the cryptocurrency space, and don't fantasize about easily making money in this unregulated market. Investments must be cautious, and one should choose legal, compliant, and transparent investment channels. Otherwise, the final result may be a total loss, or even financial ruin.