Crypto Pump and Dumps: Staying One Step Ahead of Cryptocurrency Fraudsters

Crypto Pump and Dumps

Pump and dumps have effected hundreds of coins within the past few months. How do we stay ahead of fraudulent price manipulation?

We’ve all seen it happen one way or another:

  •  an excited promoter sharing the next ‘big thing’ in cryptocurrency
  •  a generous insider sharing a ‘hot tip’ about the latest ICO
  •  an ‘honest’ review article heaping praises on a brand new cryptocurrency

Whatever form they take, cryptocurrency pump and dump schemes are rampant and having a major impact on the marketplace. It is estimated that these schemes have netted their promoters more than $800 million in income for the first half of 2018 alone.

Fortunately it’s pretty easy to stay one step ahead of the latest cryptocurrency pump and dump schemes by understanding how they work.

Trading Groups and Private Platforms

Most cryptocurrency pump and dump schemes are conducted by organized trading groups who use various popular online messaging platforms and social media apps to spread their disinformation.

However, the most effective cryptocurrency pump and dump schemes now use private messaging platforms that are heavily moderated to control the flow of information.

These trading groups draw in their victims by posing as neutral grounds for the exchanging of exclusive cryptocurrency trading information.

Victims are enticed to join by the promise of free access to valuable tips and ideas, and the platform will function as a normal trading group to build confidence and a sense of security in the victims.

The Pump

These trading groups then slowly feed the victims false information about one or more cryptocurrencies or ICOs that promise to offer enormous returns on some specific date.

This information seemingly comes from a wide variety of different knowledgeable cryptocurrency traders, but it is actually all coming from one small trading group of price manipulators.

The trading group ensures that these platforms are heavily moderated, so any messages that are not ‘on point’ will quickly be deleted and the users who posted them banned.

These trading groups generally choose very lightly traded cryptocurrencies or ICOs, so that even a small number of victims will rapidly increase the price, especially since the buying frenzy is designed to happen on a specific date or over a very short period of time.

And Then the Dump

These trading groups then sell their cryptocurrency holdings at extremely inflated prices, leaving their victims holding the bag as the price slides back down to where it was before the scheme was initiated.

The private messaging platform is closed down and the group moves on to their next set of victims with a new target cryptocurrency and a fresh set of online identities.

Staying Ahead of the Game

To reliably avoid these cryptocurrency pump and dump schemes, just be sure that you are getting all your information form a wide variety of reliable sources.

If some small group of cryptocurrency traders is singing the praises of some little-known cryptocurrency and you haven’t heard anything about it anywhere else on the Internet, then it is more likely a pump and dump scheme after your money than an easy insider’s ticket to wealth.