Crypto Pump and Dump Scams
Too Good to be true?
Cryptocurrency is an exciting and fast growing space that offers incredible opportunities for investors. It’s also a market rife with scams, and one of the most common is the pump and dump scheme. This tactic involves artificially inflating the price of a cryptocurrency to attract buyers, only for the organizers to sell off their holdings at the peak, leaving others with significant losses. Understanding how these schemes work is crucial to protecting your investments.
What is a Pump and Dump Scheme?
A pump and dump is a coordinated effort to manipulate the price of a cryptocurrency. It typically involves hyping up a coin, often through social media and private chat groups, to create a buying frenzy. Once the price skyrockets, the organizers coordinate and sell their holdings, or “dump,” causing the price to plummet and leaving unsuspecting investors at a loss. These scams often target low-market-cap coins that are easier to manipulate.
Why are Pump and Dump Schemes So Common in Crypto?
The decentralized and largely unregulated nature of the cryptocurrency market makes it a hotbed for pump and dump schemes. Scammers exploit the lack of oversight and use platforms like Telegram, Discord, and Twitter to coordinate their efforts. Small, lesser-known coins…
