Analysis of the scandalous pump on the Binance exchange

What is “Pump-and-dump” in simple words?

Pump&Dump schemes are fraudulent price manipulations through the misinformation spread to create hype around a shell project. They have been working in the financial environment since the beginning of the 18th century.

With the advent of new digital technologies, the problem was exacerbated by the speed of operations, the swift crooks coordination, and globalization led to the increased coverage scale and the victim numbers.

One needs “junk” coins for pumps:

1. they are originally created for artificial “pumping”.

2. they fail to meet customer expectations and lose most of its value.

3. For some reason, they are “forgotten” by their creators and remain a dead weight on the cryptoplatforms balances.

As a rule, these schemes are performed on small exchanges, since large ones value their reputation: they list new coins responsibly and are suspicious towards the cryptocurrency exchange rate manipulations.

But it seems that Changpeng Zhao's team decided to return to the uncontrolled pumping. The SNM shitcoin price pumping and resetting serves as a proof.  Furthermore, the Sonm project has been “stuck” in the exchange’s lists without movement since 2017.

What's wrong with the SONM project?

If you take a closer look at the project’s official webpage, you’ll realize that the SNM token is an internal currency in the Sonm computing power market. Or rather, a token that gives the right to participate in a cloud mining project on the Ethereum platform.

During the ICO on June 15, 2017, the team raised a total of $42 million in investments and launched the first 331,360,000 SNM at a price of $0.1268 per token. The project’s roadmap shows that the SNMs number in circulation was planned to increase to 44.4 million. Followed by the launch of the BEP-20 SNM standard. The first checkbox was ticked, but the fate of the second one remains unknown.

By the way, the roadmap was drawn up only until 2019 and has not been updated for about four years. One might ask “What would that mean?” But this is a complex question with a simple answer.

The project’s co-founders are two young Russians: Alexey Antonov and Sergey Ponomarev. Aleksey positions himself as a “blockchain speaker”, and Sergey is a smart contracts leading expert, who “defined the project’s goals”. The latter, by the way, was only 22 years old at the time the project was launched. The founders did not provide any links to social networks or LinkedIn. One Medium article on Sonm mentions “Lead CTO Igor Lebedev.” We found out that since 2018 he has been a speaker at the Russian Cyber ​​Academy. Nothing else is known about these people.

However there is an interesting thread in the archives of the anonymous Dvach forum dated June 27, 2017. A user tells how he failed his Master’s degree due to absence, “decided to raise money through crypto” and raised $ 42 million with friends. The photo on the imageboard of the newly-made millionaire is very similar to the face of the Sonm “leading smart contracts specialist”.

But, apparently, Binance lawyers were not alerted by these details, and CZ listed SNM on the exchange in September 2017.

Top SNM Holders

All holders own a total of 43 million SNM tokens, representing almost 97% of the total supply.

The largest holder is the Binance exchange itself, with 31.7 million SNM. This is 71.4% of the total coin supply! The Sonm development team has about 19%.

The minimum number of unidentified wallets that store less than 5% of tokens shows that the exchange's clients have little to no interest in the project.

Perhaps this is due to the fact that the founders themselves refused to develop the plan and did not consider it necessary to spend money on promoting SNM. It is possible that they have some issues with the exchange’s administration. The exact reason is still unknown to us. An important fact is that the exchange itself was most interested in the token pump, because the Sonm team has already hit jackpot during the ICO.

The main holder of the soaring token is Binance. Source: Twitter

How did the SNM price increase by 1300% in two days?

SNM tokens, which have a circulating supply to total supply ratio close to one, were easy to pump. They were accumulated 4 years ago, and according to their current value, there are no retail buyers left at all. It was enough to make one small purchase at a price significantly exceeding the balance sheet ($0.28), so that the token became the top “bull coin”. At the same time, a misinformation campaign was launched on Twitter to create the illusion of a “live SONM project” that has returned to the market. Then everything went on the thumb.

Pump&Dump of the SNM token followed the classic scheme. Source: coingecko

The SNM price rose to $10.91 in 48 hours, collapsed to $1.50 and has been declining since. At the time of writing, one token is offered for $0.78, but no one is buying. Binance closed the SNM/BUSD isolated margin trading pair on Nov. 23 and did not allow the transfer of the margin account currency to the spot account.

CZ's plan worked. Instead of delisting a “dead” asset, the CEO of the largest exchange profited from the pump.

There should be some meaningful conclusion here, but there won't be.

Binance has once again proved that the principles of “transparency and trust” that it holds dear are just a sweet fairy tale for gullible users. CZ scammed crypto newbies and made several million dollars from it. The Russians who did the Rug Pull in 2017 most likely did not even know what was happening.

We think that they are not too worried about this.