The pump and dump scheme

[Hobo66]

The pump and dump scheme isn't new, as it has been employed extensively in the equity markets for a long time. The idea behind the scam is very simple. A person or group will buy a large amount of a security or a token that is thinly traded (this aspect is very important), and by doing so, the price will rise.

As the initial buying causes a rise in price, the entity behind the buying will begin to promote the asset, generally in informal media. As more people jump into buying, the price will rise further, and people will tend to get excited about the prospect of further gains.

The entity that was behind the initial buying and publicity push is now ready to cash out their holdings at a much higher price level, and lock in some big gains. Anyone who has come to the market late in the cycle will be stuck with the asset and no more buyers, which is the end of the scheme.

In general, once the initial buyer who began the scheme exists the markets, and the publicity campaign wanes, the prices will fall, and anyone who holds the shares or tokens will see big losses. That, in short, is the pump and dump scheme.

[Mahanton]

In general, once the initial buyer who began the scheme exists the markets, and the publicity campaign wanes, the prices will fall, and anyone who holds the shares or tokens will see big losses. That, in short, is the pump and dump scheme.

This is just a typical definition on how pump and dump scheme works and this is actually true and most people who get victimized into this scheme is to those people who are
easily just get dragged  with the hype and without even tending to make some further or in depth research before they do make out some investment but rather they do
directly put up their money blindly just because they do saw that the price is hyping without even realizing on whats the project is all about but rather people would
realize when its too late and this would really be ending up on holding lots of shitcoins into your wallet which is the common result.

[Hobo66]

Many people just see the price pump and they started investing in it. In recent i saw many people when they saw Dogecoin pricevpump. They also started ingesting in it without research why price pump and either Dogecoin has any new partnership or feature launched. Price dropped very soon and hurts many traders..

[calabasas_crypto]

The pump and dump scheme isn't new...

Nice post and good reminder. PnD is as old as capitalism, definetely not isolated to crypto... there's a saying with big investors "load up then get loud". I think what they leave out in that saying is "... then dump".

[X-ray]

Many people just see the price pump and they started investing in it. In recent i saw many people when they saw Dogecoin pricevpump. They also started ingesting in it without research why price pump and either Dogecoin has any new partnership or feature launched. Price dropped very soon and hurts many traders..

Agreed, that's matched with the scheme that used by wallstreetbets on telegram group. The owner was buying it before the pump and he was dictating its users to spend their bitcoin to be used to buy when the pump was coming and the group owner was preparing its asset and dump it. Doge will be dropping a lot in the long term run.

[Francis Freeman]

Many people just see the price pump and they started investing in it. In recent i saw many people when they saw Dogecoin pricevpump. They also started ingesting in it without research why price pump and either Dogecoin has any new partnership or feature launched. Price dropped very soon and hurts many traders..

That's the bad side of influencers who depend on their followers doing momentum based invest or price action investment . I almost never do that . I only invest when the fundamental of the project is good not just news/hype .

[TravelMug]

Yes, this is pretty much straight-forward definition of a pump and dump scheme.

And obviously, this is a fraudulent practice not just in crypto, it is just magnify though because we have trading signal groups in telegram and twitter trying to sell this scheme specially to newbies. But the only one that benefits from this and making tons of money is the people behind the project. That's why everyone is really advise not to pay for this supposedly pump and dump groups.

[Banulit]

The pump and dump scheme isn't new, as it has been employed extensively in the equity markets for a long time. The idea behind the scam is very simple. A person or group will buy a large amount of a security or a token that is thinly traded (this aspect is very important), and by doing so, the price will rise.

As the initial buying causes a rise in price, the entity behind the buying will begin to promote the asset, generally in informal media. As more people jump into buying, the price will rise further, and people will tend to get excited about the prospect of further gains.

The entity that was behind the initial buying and publicity push is now ready to cash out their holdings at a much higher price level, and lock in some big gains. Anyone who has come to the market late in the cycle will be stuck with the asset and no more buyers, which is the end of the scheme.

In general, once the initial buyer who began the scheme exists the markets, and the publicity campaign wanes, the prices will fall, and anyone who holds the shares or tokens will see big losses. That, in short, is the pump and dump scheme.

A very well said definition of pump and dump scheme which mostly the people who fall on it are newbies that was attract by FOMOs create by a hype of the pump. That is why you really need to do your own research, be vigilant, be more cautious and be wiser in every action and decision that you will deal with in the crypto-world in order to avoid those kind of circumstances.

[goinmerry]

That kind of scheme is already in the crypto-industry for a long time so others are now aware of it.

Before, it's easy to manipulate some of the low cap coins and shilling is effective. But on what I'm seeing today, there are only a few people now involving in a trading group signal or a group that shills a certain coin.

Many people just see the price pump and they started investing in it. In recent i saw many people when they saw Dogecoin pricevpump. They also started ingesting in it without research why price pump and either Dogecoin has any new partnership or feature launched. Price dropped very soon and hurts many traders..

There is nothing wrong if people want to ride a certain pump especially on Dogecoin but they should know the risks and try to avoid being carried away, either will buy at peak or still waiting for a much higher price before selling.

[Beparanf]

Yes, this is pretty much straight-forward definition of a pump and dump scheme.

And obviously, this is a fraudulent practice not just in crypto, it is just magnify though because we have trading signal groups in telegram and twitter trying to sell this scheme specially to newbies. But the only one that benefits from this and making tons of money is the people behind the project. That's why everyone is really advise not to pay for this supposedly pump and dump groups.

Most of trading signal group in telegram don't target a coin with thin order book just like what OP describing. They are using indicators to attract traders to buy the token neglecting the trading volume of the token. If this fraud group target a coin with thin order book, they might suffer too a great if ever the early holders of that coin sold there stock after this fraud group pump it since it will be easy to dump it too.

Trading signal group is evolving. Maybe there are few group doing it but its very risky too in there part. Even Doge and XRP with billion volume suffer pump and dump so what more for coin with thin order book.

[lienfaye]

Well said. For people who are just following the hype and not doing their own research they are likely to become a victim of this pump and dump scheme.

Some of us are a fan of hype (specially the new coins sprouting) because we can earn huge for engaging ourselves. But behind that is the people manipulating the price and will exit after earning enough.

If you're one of the late investors then you might really end up losing your money. Nevertheless its not new anymore here in crypto and any other investment opportunity thus dont be fool and always dyor.

[asriloni]

That's the bad side of influencers who depend on their followers doing momentum based invest or price action investment

You should not call them as influencer because they are only fooling their fans to get the money from them. This is happening in almost all of the influencer started from the mcafee, famous crypto youtuber, WSB and many more.
All of them were liars that can't be trusted. Trust yourself. The influencer will always call their fans to buy the coin after they have been accumulating a lot of profit.
That's a garbage trick to fool others with giving the promise to get a lot of return from the pump. idk why there are lots of people still believe in the PnD scheme.

[TastyChillySauce00]

it's risky to get involve to this pump and dump scheme

The leaders will never make its member get the profit from the pump The leaders will always tell which coin that will be pumped after he already accumulated a lot of coins. this scam scheme already exists since a long time ago. The newcomers will come to such a group will always be fooled by joining it in the late game.
That's a fully organized scam game. People should have traded based on their own analyzation. There lots of PnD group on telegroup but only some were real PnD group.

[Coyster]

To add to the OP, here is an extensive thread on what a pump and dump scheme is: https://bitcointalk.org/index.php?topic=5254863.0, pump and dump has been used on the network for quite a long time, that's why as a matter of necessity, doing your own very thorough research before buying into any investment is always expected of an investor. If one can ignore hype, cause a pump scheme creates hype and allures people into the system, leaving them with dumped coins at the end, don't fall for hypes and you won't be a victim of pump and dump schemes.

[qwertyup23]

This is very informative and clearly explained.

At first, I thought that pump and dumps were categorized and reconigze as a technique made by capitalists who owns majority of the stock of the coin. As they have majority of the coins in possession, they control the price due to the supply/demand law.

The problem with the pump and dump scheme falls on the investors who invest their money without even knowing what they are investing on. As what most have mentioned, they merely jump on the 'hype train' and once the hype is over and they purchased the coin during ATH, they blame the entire thing and categorize it as a 'scam'.

[makishart]

I have studied PnD scheme and i have joined on the WSB telegram group and discord. Sometimes the pumpers aka creator of the PnD scheme was giving advice to the its members to hodl on for a few minutes to give the chance for the early buyers to dump their coins to the market. A
At the end of story the only late joiners will always lose their money. I just call that as a way to rob others money.
I would like to call this as a scam rather than PnD.
Pumpers and dumpers are fooling the newbies.

[gurunanakji777]

The Pump and dump scheme is not a new scheme. Most newbies trapped in the pump and dump scheme because they excited when prices start rising aggressively and they jump into and buy at higher prices and holding it for huge profit by seeing the aggressive movement in the coin but in the end, most of the newbies end up in big loss I would also say its a scam.

[Stanlo]

This is not a new scheme anymore, there are many pump and dump groups available on telegram as we speak, they still keep taking advantage of those who aren't aware of such scamming strategy, the most popular platforms that these pump and dump group use for creating FOMO is twitter, I was caught in their trap once and since then I've learned

[michellee]

People who join the crypto market will be familiar with the pump and dump scheme. Many of them use that moment to follow the price increases, but some lose their money because they are late to buy or sell. The pump and dump scheme can happen to many coins, including bitcoin, but the reason the pump or dump happens can vary, and no one will know the reason. Like what happens to dogecoin, people start to buy dogecoin when the price already increase, and they buy and sell the dogecoin or sell it at a high peak. It could happen many times in the future, as we have so many coins that can get the pump and dump moment.

[Yaunfitda]

I have created a thread about this with infographics, What is Pump and Dump Scheme?

This is very applicable right now at we have seen the likes of Doge coin being hugely pump by this signal groups. Maybe others need to revisit the thread that I have created to get a clearer picture of what this fraudulent activity is.