One of the biggest dangers for new crypto investors is pump and dump. Suffice it to say, it’s one of the most successful scams that many investors fall for repeatedly. In this article, we’ll explain what exactly a crypto pump and dump are and how to avoid them. Being an unregulated frontier, crypto naturally attracts its fair share of criminals.

The recent introduction of thousands of cryptocurrencies in an unregulated environment has created many opportunities for unscrupulous traders to profit from price manipulation. We quantify the scope of one widespread tactic, the “pump and dump”, in which actors coordinate to bid up the price of coins before selling at a profit. We joined all relevant channels on two popular group-messaging platforms, Telegram and Discord, and identified thousands of different pumps targeting hundreds of coins.

With the proliferation of pump-and-dump schemes (P&Ds) in the cryptocurrency market, it becomes imperative to detect such fraudulent activities in advance to alert potentially susceptible investors. In this paper, we focus on predicting the pump probability of all coins listed in the target exchange before a scheduled pump time, which we refer to as the target coin prediction task. Firstly, we conduct a comprehensive study of the latest 709 P&D events organized in Telegram from Jan. 2019 to Jan. 2022. Our empirical analysis reveals some interesting patterns of P&Ds, such as that pumped coins exhibit intra-channel homogeneity and inter-channel heterogeneity.

A pump and dump scheme is a fraudulent tactic where the orchestrators artificially inflate the price of a stock or other asset by spreading false or misleading information, only to sell off their own shares at the high price, causing the value to plummet and leaving other investors with significant losses. A pump and dump scheme is a fraudulent investment strategy often used in stock or cryptocurrency markets. In these schemes, companies or coin creators begin by spreading false or misleading information to create a buying frenzy and momentum. This deliberate misinformation is used to “pump” up the price of a stock or digital asset.