Fraud in the Era of Blockchain
Cryptocurrency is vulnerable to market manipulation due to a lack of oversight—but can the technology behind it be retooled for regulation?
Back in 2011, 50 Cent got into hot water over a penny stock. In a series of tweets to his 3.8 million followers, he hyped up an obscure Florida imports company.
“HNHI is the stock symbol for TVG there launching 15 different products. they are no joke get in now,” went one tweet. “TVG stock went from 5cent to 10 in one day. You can double your money now. Just get what you can afford,” went another.
Shares for the company soared 290 percent. But the problem — as ProPublica reported at the time — was that 50 was a majority owner in H&H Imports and made himself a paper profit worth almost $5.2 million.
Ultimately, he avoided violating laws against “pumping and dumping” stock because he hadn’t sold any of it. But the massive swell of interest in worthless stock nevertheless demonstrated the power of a modern platform like Twitter to spread misinformation—all this years before “fake news” became a common term. It was reminiscent of the schemes “Wolf of Wall Street” Jordan Belfort operated over the phone through Stratton Oakmont in the 1980s, retooled for a new age of social media.
