“I almost fell from the chair”: investors lost billions of dollars after they were fooled to invest in Chinese companies listed on the US Stock Exchange

Investors in the US and several European countries lost billions of dollars last month, after betting some Chinese companies listed on the American stock market, their value collapsed shortly after they were intensely promoted on social networks, reports Financial Times.

The price of the shares of seven small companies listed on the Nasdaq – Concorde International Stock Exchange, Ostin Technology, Top Kingwin, Skyline Builders, Everbright Digital, Park Ha Biological Technology and Pheton Holdings – have dropped over 80% each, in just a few trading sessions of recent weeks.

The declines deleted a total of $ 3.7 billion from their market value, according to the data analyzed by the predictive analysis company Investorink. All seven actions had grown suddenly before unexpected massive sales, being promoted to investors through WhatsApp groups and on social platforms.

Analysts and investors said that these movements wore many of the characteristic signs of “Pump and Dump” scams. These refer to the situations in which the price of an action is artificially inflated in a short period of time, through massive purchases, only with the purpose of selling it at a higher price.

The price of the shares is then collapsed, causing important losses for investors who were not aware of the scheme.

There is no suggestion that the mentioned companies were directly involved in these unusual shares of shares. None of the seven companies responded to comment requests.

Dramatic growth of complaints on supposedly stock -in -law fraud in the US

“Pump and Dump” scams have affected American markets for decades, but they last represented a major problem during the “boom” on the stock exchange of 2020 and 2021, when dozens of unprofitable Chinese groups were listed for spectacular prices, just to then collapse.

FBI declared last month that it had an annual increase of 300% of the complaints of victims who mention “stock market fraud”. The agency added that investors are targeted on social networks of people who are given as “legitimate brokerage companies or well -known scholars”.

Many of the scams are related to the record number of Chinese companies listed on US stock exchanges in 2024, a trend that continued this year/

Tia Castagno, who runs a “coaching” company in London for directors, was added to a WhatsApp group after clicking on a Facebook advertisement. She finally lost all her savings after being encouraged to invest in Ostin Technology what seemed to be a legitimate American investment firm.

“I feel a goal in my stomach and shame. I keep questioning my judgment and I remember how I felt when I was pulling my carpet,” she told FT.

Ryan Sweetnam, a British lawyer at the applicors, said that “more than one hundred customers involved in Pump and Dump with cheap Chinese actions have asked me for help in recent months.”

American regulatory authorities seem to ignore the situation

Analysts say that US regulatory authorities have been repeatedly warned that certain actions are used as vehicles for fraud. The founder of Investorlink, Matthew Michel, has sent emails every week, in the last seven months, to contacts, including journalists from the Financial Times, to signal unusual activities on social networks around such Chinese companies listed in the US.

A large trading company on Wall Street – which also uses the Investorink platform and has asked not to be called – has repeatedly warned the Commission for Securities and Scholars (SEC) and NASDAQ about the possible manipulation of the shares of some companies.

Nasdaq and sec refused to comment on the information.

Investorlink drew the attention of the market and FT to suspicious online activities related to Pheton in early July, almost three weeks before the company's shares fall 95% in a single trading session.

A European retail sector investor, who said he had lost a “six-digit amount” on Pheton and asked not to be called, was added to a WhatsApp investment group after clicking on a Facebook advertisement that praised an alleged support from a known American TV commentator.

The WhatsApp group, with about 40 participants, the majority with phone numbers in the UK and the US, seemed to be administered by a legitimate American broker, who began to recommend investments in the health sector and companies involved in cancer treatments.

“I almost fell off the chair”

“At first they asked me if they were a muzzle you have … a good stratagem. It seemed a clean operation,” says the retail investor. “I almost fell off the chair [când prețul acțiunii s-a prăbușit]it was an experience of awakening to reality. “

The possible manipulation of Ostin actions was reported by Investorlink on June 9, two weeks before they decrease by 94% in one day.

Noushin Mirshokraei, who runs a food company in Italy, said he lost $ 70,000 after being convinced on an WhatsApp group to buy Ostin actions before a partnership that the company followed, to conclude with a large American company listed on the stock market.

“All the information that was provided to us on WhatsApp groups came from fake participants,” she said. “The only real people from there were the manipulated,” she says.

Meta gives assurances to take measures to combat frauds promoted on Facebook

A meta spokesman said: “We do not want this type of content on our platforms, which is why we continue to invest in technology to aggressively combat scams; to provide warnings and users to users on the platform; and to collaborate with banks, governments and authorities to stop these criminals.”

The analysis of Matthew Michel from Investorlink on the price movements of Ostin actions also showed “Coordinated activity clusters” on Reddit, with 12 users who have published similar promotional content on action within two hours.

Geolocalization metadata suggests that three of these users were located in Russia and Iran-a situation that Investorlink also identified in other cases of “pump and dump”, some more extreme than others.

Until June 17, the shares of the Chinese company of traditional Medicine Regency Bioscience – which reported a net loss of $ 4.4 million in 2024 – had increased by almost 60,000%, offering the company a huge stock marketization, of about $ 38 billion.

The price of the shares has dropped since then by 83%. There is no suggestion that Regency was involved in price developments. The company did not respond to the comment request.