Researchers Publish Evidence of ChainLink Token Price Manipulation

Researchers claim that pump and dump manipulation involving the Chainlink token occurred in spring-summer 2019.

Update [2:27pm UTC]: This article has been changed to reflect that Chainlink (LINK) is different from LINK, the native cryptocurrency of Japanese messaging giant LINE’s service-oriented blockchain.

Researchers have published evidence of what they claim is a coordinated pump and dump manipulation involving the Chainlink (LINK) token.

A blog post published on Sept. 11 by AnChain.Ai researchers contains an analysis of apparently suspicious LINK token transactions between April 1, 2019, and July 26, 2019. 

Pump and dump: an overview

Pump and dump is the name given to a type of microcap fraud, in which the price of an asset — frequently one with low market capitalization and share volume — is manipulated by a coordinated rush of high-volume purchases by a group of actors working in complicity. 

The surge in purchases artificially inflates the asset’s demand, pushing up its price and reeling in unwitting investors: the high-volume purchase strategy is often accompanied by circulating positive “expert” or official statements and/or recommendations online in a bid to further lure in casual traders. 

At the end of the scheme, the manipulators dump their tokens — overwhelming organic demand and causing the asset’s price to plummet, leaving victims with devalued holdings. The researchers note:

“Cryptocurrencies tend to be exceptionally vulnerable to this form of attack, as coins are often heavily concentrated in the hands of a comparatively small number of individuals, whose market activities can dramatically impact the coin price.”

Alleged 2019 LINK pump and dump manipulation

An.Chain has published a detailed timeline, which includes links to several apparently implicated tweets, the date of LINK’s listing on crypto exchange Coinbase, and a tracing of the asset’s price movements — from $1.19 on June 13 to $4.45 by June 29, before beginning to drop on July 2 to $3.73.

An.Chain outlines the parameters it used to identify an apparently coordinated group of addresses it believes to be behind the spike in purchases, their interactions and strategies — such as the use of multiple jump addresses to mask the token flow.