Yesterday, the price of E-Coin went up 4,000 percent and then it dropped below its opening price on that day. The Swiss Financial Market Supervisory Authority (FINMA) accused E-Coin of being a false cryptocurrency.
This cryptocurrency started trading with the price of 6.51 dollars per coin and then it reached its historical maximum od 290.12 dollars yesterday afternoon. This made E-Coin one of the top 30 cryptocurrencies according to the market capitalization, according to CoinMarketCap. A few hours later, the price of the cryptocurrency fell abruptly to 1.91 dollars per coin and went down to the position number 443 of the CoinMarketCap cryptocurrency ranking. At the moment of the writing of this article, the price is 3.80 dollars.
The movement of E-Coin resembles the Pump and Dump strategy used to inflate the price of an asset in order to sell it massively at the moment when its price is overrated. This causes an abrupt drop of the price of the asset and brings huge earnings to the people who bought it when the price was low. On the other hand, it causes big losses for the ones who bought it when the price was high.
This does not come as a complete surprise. Last September, the Swiss Financial Market Supervisory Authority (FINMA) stopped the E-Coin operations in the country and accused the company of creating a fraudulent scheme by using a false cryptocurrency. This took place after E-Coin raised 4.2 million dollars from the investors without having the required banking licenses.
Likewise, the Swiss financial authorities discovered an organization called Quid Pro Quo Association. This organization was dealing with fraudulent cryptocurrencies and worked in cooperation with other two entities called DIGITAL TRADING AG and Marcelo Group AG. The authorities initiated a bankruptcy process against the aforementioned companies, blocking their assets worth more than two million Swiss francs.
The FINMA says E-Coin was not behaving like other cryptocurrencies. The cryptocurrency did not use the blockchain technology. Instead, it was stored on local servers. Furthermore, this scheme deceived the investors by assuring them the cryptocurrency was 80% backed up by tangible assets. In reality, this percentage was much lower, which leads to the progressive dilution of the value of the cryptocurrency.