If you need a real-time case study on why I teach about penny stock scams, look no further than China Liberal Education Holdings Ltd. (NASDAQ: CLEU). This was a textbook penny stock pump, the kind of setup that wipes out greedy and uninformed traders who don’t know what they’re doing.
This pattern isn’t new. This isn’t an accident. It’s the same rinse-and-repeat penny stock manipulation I’ve been exposing for 20+ years.
Yet here we are again, with traders down 97% overnight, wondering how they got scammed.

My heart goes out to you if you were one of the traders affected. Believe me, I’m on your side. These penny stock scammers destroy the lives of real people. It makes me absolutely sick every time I see it.
Let me break it down for you so you never fall for a disaster like this again.
How the CLEU Scam Worked
CLEU is a low-float Chinese penny stock in the education sector, supposedly focused on overseas study consulting services, smart campus solutions, and technological consulting services for smart campus solutions.
CLEU’s pump started on January 22, when this previously-illiquid Chinese stock suddenly saw over 100 million shares of volume. That’s hundreds of millions of dollars flooding into a stock that had barely traded before.
Let me repeat that: this stock was practically dead before January 22.
Then suddenly, volume exploded. The stock jumped from $4 to $8, convincing naïve traders that it was some “hot new AI play” or an “undervalued gem.”
No news. No real company fundamentals. Just a massive surge in buying.
That was your first red flag.
Then came the dump—the inevitable rug pull.
In January 30 premarket, the stock plummeted from the high $7s to the $1s, followed by a further implosion throughout the day..
97% gone.
Millions of dollars wiped out.
Retail traders left holding the bag.
If you’ve been in my Trading Challenge or watched my 7-Step Pennystocking Framework, you’d have known exactly what was coming…
Remember this chart well, its the basis for my 7-step framework, @30DayBoot & @completepenny & you must study not to fall prey to greed/ignorance or you'll get wrecked like 90% of traders. It's VITAL to sell into excessive strength/hype, do not just hold & hope like most newbies pic.twitter.com/QsAGHsI6lp
— Timothy Sykes (@timothysykes) February 28, 2021
Why This Scam Was Obvious
Here’s the pattern I’ve seen play out again and again…
1. Classic Penny Stock Pumping
CLEU followed the same exact playbook as countless past scams.
- Step 1: Thinly traded penny stock.
- Step 2: Volume magically appears.
- Step 3: The price surges, sucking in clueless traders.
- Step 4: The scammy insiders dump their shares, leaving retail traders in ruins.
This is not new. It’s happened hundreds of times.
2. No Legitimate News
There was no major press release or new earnings report to justify the spike.
If a stock skyrockets for no reason, it’s being manipulated. Period.
More Breaking News
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3. Chinese Low-Float Stocks Are the Worst
I’ve warned about Chinese penny stocks for years.
These companies are black holes of transparency, often controlled by insiders who manipulate share prices while remaining untouchable by U.S. regulators.
They’re infamous for pumps, reverse splits, and dilution—just like CLEU.
But still, retail traders fall for it.
The CLEU Pump Aftermath: Traders Get Wiped Out
If you want to see real-time devastation, go to Reddit and X right now.
People are losing life savings—$50K, $100K, even $400K—because they got lured into this “too good to be true” setup.
WhatsApp groups and pumpers on social media promised 200–300% gains.
And then? They got destroyed.
Even worse, some people are still holding CLEU, hoping for a comeback.
News flash: It’s not coming back.
These stocks don’t recover. They get delisted or reverse split into oblivion.
If you don’t cut losses quickly, you will eventually get wiped out.
And now, as of 1 PM EST on January 31, Timothy Sykes News has verified that buying CLEU stock is no longer allowed on Schwab—but you can still buy it on E-Trade.
Let that sink in.
Some brokers have already seen the writing on the wall. Others? They’ll keep letting uninformed traders gamble their money away.
The system is rigged.
That’s why I sit in cash until I see a REAL opportunity—not some garbage manipulated penny stock.
Lessons From CLEU’s Scam
If you take nothing else from this article, remember these three lessons:
1. Never Trust Thinly Traded Penny Stocks That Suddenly Spike
100 million shares of volume doesn’t just appear out of nowhere. It’s part of a scam.
2. Pump and Dumps Always End in Disaster
If you buy a stock that’s up 200–300% in a week, you are the exit liquidity for insiders dumping their shares.
3. Always Cut Losses Quickly
If you didn’t cut losses quickly on CLEU, you probably lost everything.
I teach my students to trade scared and protect their accounts. If a stock turns against you, get out immediately.
Final Thoughts: Will You Be the Next Penny Stock Victim?
CLEU was just another in a long line of penny stock pumps.
But the real question is: Will you know how to spot a pump next time?
Are you going to blindly buy the next “hot stock”, or are you going to learn how penny stocks actually work?
The next scam is already brewing. Will you fall for it, or will you be prepared?
Join my free webinar to learn how to spot these scams before they destroy your account.
Don’t be the next bag holder. Be the trader who profits from the pump—before the dump.
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