ASIC interpret telegrams as market manipulation

An ASIC investigation intended to identify market manipulation uncovered a coordinated pump-and-dump trading scheme conducted through Telegram.

Telegram is a secure messaging and audio calling cloud-based app that allows users to send messages, photos, and files to contacts for free. The specific use of this channel by a group has resulted in criminal prosecutions and guilty pleas, and has renewed focus on the application of Australia’s market-manipulation laws in digital environments.

The matter involves four individuals who used encrypted messaging platforms to organise trading activity in low-value ASX-listed securities. ASIC’s investigation and the subsequent prosecutions illustrate the regulator’s shift toward targeted enforcement against social-media-based market conduct.

Recent legal commentary indicates that the case forms part of a broader regulatory pattern: increased surveillance of online trading groups, greater scrutiny of retail investors participating in coordinated trading activity, and a willingness to pursue criminal charges where market-rigging behaviour is identified.

Background

The conduct occurred in 2021 and centred on a private Telegram chat described in some reports as the “ASX Pump and Dump Group”. Members of the group identified thinly traded micro-cap stocks, purchased shares at low prices, and then used a public Telegram channel to promote the securities to followers. The promotions occurred over a three-week period during which nine separate posts encouraged other retail traders to purchase the targeted shares.

ASIC alleges that these coordinated posts were designed to create sudden price increases and abnormal spikes in trading volume. Once the stocks rose, the participants sold their holdings for profit. The pattern replicated a classic pump-and-dump model, where uniform trading activity creates a false or misleading appearance of genuine market demand.

During this period, ASIC monitored communications within the Telegram channels. The regulator ultimately identified four individuals, Larissa Quinlan, Kurt Stuart, Emma Summer and Syed Yusuf, as participants in the coordinated scheme.

Criminal Charges and Pleas

Following ASIC’s investigation, the matter was referred to the Commonwealth Director of Public Prosecutions. Charges were brought under:

• Section 11.5(1) of the Criminal Code (Cth): Conspiracy to commit market manipulation

• Section 1041B(1)(b) of the Corporations Act 2001 (Cth): Conduct creating a false or misleading appearance in the market

• Proceeds-of-crime provisions under the Criminal Code (Cth)

  
  

In June 2025, all four defendants entered guilty pleas in the Downing Centre Local Court to various combinations of these charges. Some defendants admitted to dealing with proceeds of crime exceeding A$10,000, while others admitted to handling smaller amounts or engaging in reckless conduct involving illicit proceeds.

The matter has been listed for further mention in the District Court prior to sentencing.

The applicable penalties are significant. Conspiracy to commit market manipulation carries a potential maximum sentence of 10–15 years’ imprisonment and fines exceeding A$1 million. The guilty pleas therefore represent an important acknowledgment that coordinated trading schemes conducted through social-media channels fall within the scope of criminal market-rigging laws, not merely opportunistic trading activity.

Regulatory Context

ASIC’s actions in this matter align with its broader enforcement focus on market manipulation and misleading conduct in online trading environments.

The regulator has increasingly emphasised the risks posed by coordinated online trading activity, particularly where social media and encrypted messaging platforms are used to organise and amplify trading strategies in thinly traded securities.

Key drivers of this enforcement focus include:

• Growth of encrypted trading groups: Platforms such as Telegram and Discord enable coordinated trading activity and can make identification of participants more difficult, increasing regulatory attention on these channels.

• Increased retail participation in speculative trading: The rise in retail trading volumes since 2020 has heightened scrutiny of micro-cap securities and the potential for coordinated promotion to distort market prices.

• Regulatory focus on online promotion: ASIC’s public guidance directed at “finfluencers” and online promoters signals that deliberate coordination and promotion may attract enforcement action, including criminal prosecution in appropriate cases.

• Use of covert surveillance and targeted investigations: ASIC has publicly acknowledged using surveillance techniques and targeted investigations to identify misconduct occurring through online communities.

  
  

Legal Considerations

• Criminal Code (Cth) s 11.5(1) – Conspiracy.

  The defendants were charged with conspiracy to commit a market manipulation offence, reflecting alleged coordinated planning or agreement to engage in market-rigging conduct.

• Corporations Act 2001 (Cth) s 1041B(1)(b) – False or misleading appearance.

  The conduct was alleged to have created a false or misleading appearance of active trading in the market, consistent with the market-manipulation prohibition under the Corporations Act.

• Proceeds-of-crime liability

  Some defendants admitted to dealing with proceeds of crime, reflecting statutory exposure under the Criminal Code’s proceeds-of-crime provisions where financial benefits arise from criminal conduct.

• Platform neutrality

  The legal test applies irrespective of whether the conduct occurred through encrypted messaging channels or public online forums; the law focuses on the market impact and intent, not the communication medium.

These measures reflect the heightened enforcement environment now associated with digital trading behaviour.

Industry Implications

The matter signals a clear shift in how market-manipulation offences are detected and prosecuted. ASIC’s use of covert surveillance, combined with willing pursuit of criminal charges, indicates that unregulated online “pump groups” are now a primary focus of enforcement.

For brokers, market operators and corporate advisers, the practical implications include increased supervisory expectations, greater emphasis on monitoring online trading sentiment, and heightened scrutiny of abnormal patterns linked to social-media activity. Education of clients - particularly retail investors - is a sensible risk-management strategy.

Conclusion

The prosecutions arising from the Telegram pump-and-dump scheme illustrate ASIC’s expanding focus on market-manipulation risks emerging from digital trading environments. The guilty pleas confirm that coordinated online promotion designed to inflate stock prices constitutes criminal conduct under Australian law. As enforcement continues to evolve, organisations operating within Australia’s financial markets are well advised to respond with enhanced oversight and updated compliance frameworks to address the risks associated with social-media-driven trading activity.