Participants in the alleged "pump and dump" scheme face up to 15 years behind bars and fines of more than $1 million, after being charged with conspiracy to commit market rigging and false trading.
The venture was run in an online chat named 'ASX Pump and Dump Group' on encrypted messaging app Telegram where penny stocks were discussed and selected before being announced to the public, the Australian Securities and Investments Commission alleges.
Four alleged participants were charged in Sydney's Downing Centre Local Court on Tuesday, ASIC said.
The group have also been charged with dealing with the proceeds of crime, in relation to the money they each allegedly obtained from selling shares in the so-called pump-and-dump activity.
The alleged actions took place in September 2021 and nine announcements were made to the 'ASX Pump and Dump Group' to boost the selected stocks, the regulator said.
One month later, ASIC warned traders in a Telegram share market chat room they may be breaking the law by seeking to organise stock price manipulation.
The allegedly illegal scheme prompted the corporate watchdog's social media-based intervention, ASIC chairman Joe Longo said.
"ASIC monitors the cleanliness of our markets," he said.
"This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law.
"Coordinated attempts to manipulate the market is a criminal offence."
The matter has been adjourned until July 30 for a detention application to be made in respect of each of the defendants.
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