NFTs from an Islamic Perspective (Shaykh Dr Sajid Umar, Standing Shariah Committee, Islamic Council of Europe (ICE), Interviewed by Usman Malik) Continued from Decrypting Cryptos…
How Shariah-compliant are the so-called Islamic tokens in the service of the Ummah? This intriguing question has led me on a few occasions to interact…
I did not require more than the intelligence of a school kid to discern the fact of a clear manipulation of prices by a single account.Apparently, one seed-investor had dumped his/her tokens in a fairly large volume for the price to tank by over 15 percent. I was curious. And I decided to check the price-volume-transactions data of this company just for today. I did not require more than the intelligence of a school kid to discern the fact of a clear manipulation of prices by a single account.
If you examine the the above random screen today you can see that out of 17 transactions in above chart, 12 large ones were "reversing" transactions. This was happening in broad day light all through the day – a large sale in X quantity followed by a purchase of same quantity; a large purchase of Y quantity by a sale of same quantity, all from a single account (follow the red arrows).
And then it was time for the impatient betrayal.And then it was time for the impatient betrayal. Indeed, there was this seed investor who seemed to have betrayed the common good of the cartel. While the earlier price manipulator was still busy in his game, the lone wolf had struck. His/her one account (follow the yellow arrows) was singularly responsible for dumping a large volume of tokens within an interval of 30 minutes. One more account holder was quick to notice this and follow suit (follow blue arrow). The steep fall in price by over 15 percent naturally caused a raucous in the telegram group and loud voices complaining about unethical acts by promoters. These were the same voices that were congratulating the promoters when prices were being manipulated upwards and upwards. I wondered, if the promoters have started feeling the heat and decided in favor of dumping after days and weeks of pumping! Don’t the distinguished members of the Shariah panel know that any form of manipulation of demand and supply and hence prices, is simply haram? Or have they lost their voice in the Board? I also wondered, has this been a day well-spent in following price charts and authoring this blog to enhance the level of awareness about the fraud being perpetrated on common investors? Or has this been an exercise in vain? Disclaimer: I am facing a backash from the management and Shariah scholars of a so-called "Shariah-compliant" token company to withdraw the piece or clearly mention that the company cited as example in the blog is not theirs. I wonder how I can do that without naming the company!! I would however, like to underline the fact that the "story-telling" style of the blog allows room for imagination and speculation to drive home a point. Here, the purpose of the blog is to highlight some bad practices commonly and frequetly observed, the un-regulated nature of the crypto market, and the enormous risk and uncertainty facing the investors. It is not about scaring investors away from or luring them to a given company. So investors! do your own research and/or consult your own Shariah scholars and advisors.
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