What does a crypto pump and dump scheme look like?

We can see an example of what a typical crypto pump and dump scheme looks like on-chain below in Chainalysis Storyline, using an undisclosed token example. The token bears all the telltale signs of a pump and dump scheme, with the asset’s price dropping 90% in the first week of trading following the token creator dumping their holdings.

What are crypto dump signals?

After the pumping causes a significant price hike, which are called crypto dump signals, members start selling at a good profit. There are two types of groups on Telegram and Discord that post signals on unknown crypto coins to inflate the value of the underlying coins artificially, as explained below:

Is the cryptocurrency market prone to pump and dump scams?

Unfortunately, due to technical complexity and lack of oversight, the cryptocurrency market is particularly susceptible to pump and dump. A research paper from 2018, which observed two messaging platforms popular among bitcoin investors over the course of six months, discovered more than 3,400 pump-and-dump scams.

What is a pump and dump scam?

Pumpers usually lure new victims in a crypto pump and dump (Telegram) with the help of fake news that is spreading around social media. Is pump and dump legal?