Popular CNBC host Jim Cramer has charged the U.S. Securities and Exchange Commission (SEC) to immediately launch a crackdown campaign on crypto pump-and-dump schemes. He said this during his most recent “Mad Money” show, which was held on Thursday.
What are crypto pump-and-dumps?
According to Cramer, pump-and-dump schemes have consistently proven over time to be the bane of the very existence of the cryptocurrency concept. And as such, should be topping the priority list of top regulators like the SEC.
Typically, a pump-and-dump scheme takes place when fraudsters put out attractive and untrue information about an asset. This hype leads to a buying frenzy, thereby artificially inflating the value of such an asset. However, that’s only the “pump” stage. When they have made enough from the pump, they then “dump” their holdings by selling off theirs at the inflated price. And usually, that asset never recovers.
Jim Cramer worries over who will regulate crypto
Interestingly, Cramer’s call to action for SEC to clamp down on these schemes did not just happen. There’s a recent debate over what agency should have jurisdiction over cryptocurrencies. And his commentaries appear to be in hopes of seeing the SEC carry on regulating cryptocurrencies just like before. Cramer said:
“I think it’s vital for the SEC to pursue these targets aggressively.”
Recently, there have been reports that Congress may be considering designating the regulation of crypto to the Commodity Futures Trading Commission (CFTC). However, Cramer’s fears border around the fact that the CFTC may not be as aggressive as SEC in the enforcement of crypto laws and regulations. And given the history of the crypto industry and its proneness to illegal activities, this could pose a big problem.
Lastly, the CNBC host also ensured to share his thoughts that the SEC should oversee special purpose acquisition companies (SPACs) as well.