Investire | May 2021

They are objects of obscure desire, unregulated and appreciated especially by those who see banks and financial markets as a bitter enemy.

It is a copious army: millions of young millennials, digital natives, among them some of the most brilliant start uppers and the most experienced hackers, all with high environmental awareness. After unleashing hell on Wall Street, part of them joined those who act to preserve the planet.

The members of the Reddit community Wallstreetbets – also responsible of a 1,500% increase in GameStop’s share price against those who wanted to gain from its decline – donated over 377 thousand dollars to the Dian Fossey Gorilla Fund, an organization funded after the murder of the American zoologist in Rwanda at the end of 1985, known for the film Gorillas in the Mist featuring Sigourney Weaver.

The donations, on behalf on fictional donors such as “Fuck Melvin capital” or “Jim Cramer’s Tears”, arrived in the space of only one day, Saturday 13 March.

The Melvin Capital fund became the victim and perpetrator of the GameStop case. Since then, Jim Cramer, famous host of Mad Money on CNBC, has become a strong supporter of Bitcoin.

The GameStop affair is only the tip of the iceberg. However, its impact was so strong because it involved the regulated market, a listed title and some quite aggressive hedge funds.

At the heart of these operations is a very old strategy called “Pump and dump”. It consists in opening a long position on a financial instrument before making other purchases and/or spreading misleading positive information on the financial instrument in order to increase its value.

As a consequence, other members of the market are deceived and induced to make other purchases. This way, financial instruments are sold at a much higher cost.

This is considered illegal in regulated markets, but it isn’t in the market of cryptocurrencies. And, because of the lack of regulations, this strategy is spreading in Italy as well.

An interesting fact: among the social networks used for such operations, Telegram, a business based in Dubai and funded by the Russian entrepreneur Pavel Durov, is the most widely used because it is considered the most secure. 

This is a veritable jungle: no wonder that the assets collected by these resourceful young people have, in part, been donated to a foundation which protects gorillas.

Nicola Ronchetti