Nearly $4 billion vanished in July after a cluster of Chinese microcap stocks, all listed on Nasdaq, crashed more than 80% in just a few trading days. The names that tanked, Concorde International, Ostin Technology, Top KingWin, Skyline Builders, Everbright Digital, Park Ha Biological Technology, and Pheton Holdings, had all exploded in price shortly before the collapse. The trigger was an aggressive promotion on WhatsApp and social media, followed by coordinated dumping. According to the Financial Times, the seven companies together lost a total of $3.7 billion in market value. Every one of them had been promoted online in group chats that looked like legit investment forums. None of the companies were proven to have taken part in the manipulation, but analysts pointed to clear signs of pump-and-dump activity, the kind of scam that lures in retail traders, then leaves them holding worthless stocks while the organizers walk away with profits. Victims dumped after fake brokers hijack chats The FBI said complaints involving “ramp and dump stock fraud” tripled year-over-year. Investigators say scammers are now posing as legit firms or analysts to build trust on platforms like Facebook and WhatsApp, before dropping links to groups that pitch cheap Chinese stocks as can’t-miss bets. This has been tied to the surge in Chinese IPOs on US exchanges, especially in the microcap market, which has been flooded since last year by small firms from China and Hong Kong. Among those hit was Tia Castagno, a coach based in London, who lost all her savings after she joined a WhatsApp group following a Facebook ad. The group’s admins claimed they were a US investment firm. Tia was told to buy Ostin Technology, which then crashed. “There’s a feeling of emptiness in my stomach, and shame,” she said. “I keep questioning my judgment and remembering how I felt when the rug was pulled from under my feet.” Ryan Sweetnam, a lawyer at Cel Solicitors in the UK, said he’s representing “more than a hundred clients” who fell into similar traps involving Chinese penny stocks. One of those clients, a European investor, told the Financial Times they lost over $100,000 on Pheton Holdings. That investor joined a WhatsApp group that used a fake endorsement from a well-known US TV personality. “They asked if I was AI-bot early on… a good ruse. It looked like a kosher operation,” they said. “I almost fell off my chair [when the stock was dumped].” Noushin Mirshokraei, who owns a food and drinks business in Italy, said she lost $70,000 after being convinced on WhatsApp to buy Ostin ahead of a supposed partnership with a big US firm. “All the information that was given to us on WhatsApp groups was from fake participants,” she said. “The only real people in there were the ones being manipulated.” Warnings ignored as price crashes continue Matthew Michel, head of InvestorLink, has been raising the alarm for months. He said his team has flagged suspicious activity around microcap stocks every week for the past seven months. On June 9, Michel warned about Ostin, two weeks before the stock lost 94% in a single day. He also spotted red flags on Pheton three weeks before it tanked 95% in one session. One Wall Street trading firm, which uses InvestorLink’s tools and asked not to be named, has also reported concerns to Nasdaq and the SEC, saying some of these stocks were showing signs of manipulation. Michel’s breakdown of Ostin’s moves showed 12 Reddit accounts promoting the stock in the same two-hour window. He said three of the users were geolocated to Russia and Iran, which matches what his team has seen in other stock scams. Meta, which owns Facebook and WhatsApp, said it doesn’t want scam content on its platforms and claimed it’s working on better tools to catch it, including on-platform warnings, tech upgrades, and partnerships with banks and governments. On June 17, Regencell Bioscience, a Chinese herbal medicine firm, saw its shares jump 60,000% for the year, hitting a market cap of $38 billion, higher than Walgreens or Jefferies. That’s despite the company that reported a $4.4 million loss in 2024 when its stock dropped 83%. The pattern follows the same playbook: hype, spike, crash. KEY Difference Wire helps crypto brands break through and dominate headlines fast
