Manipulating the digital asset market: challenges in establishing a criminal legal defense regime

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ZARINA ILDUZOVNA KHISAMOVA^а

^аKrasnodar University of the Ministry of Internal Affairs of the Russian Federation

ELENA YURIEVNA KOMOVA^а

^bMGIMO University of the Ministry of Foreign Affairs of the Russian Federation

DOI: 10.22394/2070-8378-2021-23-2-68-73

Abstract:
The growth of the digital asset ecosystem has led to the emergence of hundreds of crypto exchanges that facilitate the trade of digital assets. This phenomenon did not remain without the attention of malefactors. Today, we can talk about an independent type of “cryptocurrency exchange crime”. The article analyzes the key criminal trends and formulates the main recommendations for the prevention of criminal encroachments in the cryptocurrency market. At the moment, one of the most common manipulative schemes is “pump and dump”, which became notorious at the turn of the 90s and 2000s. To date, no jurisdiction has created an effective protection regime against such fraud. The authors highlight the main reasons for the low efficiency of the measures taken: the presence of digital assets on the Internet led to the online nature of all stages of manipulations coordinated by anonymous groups in social networks; wide availability and lack of restrictions on the placement of tokens predetermined their regular and widespread placement (as opposed to an IPO); selfish interest of crypto-exchange sites that receive a commission from a transaction. It is emphasized that regulators’ search for a balance between innovation and investor protection is driving the reluctance of many jurisdictions to introduce proper criminal law protection regimes.

Keywords:
criminal schemes, digital assets, “pump and dump”, regulation

Received:
February 25, 2021

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