Pump and dump for crypto

Chainalysis presented a new study that showed rather unexpected results.

54% of Ethereum-based tokens released in 2023 were used for market manipulation.

The well-known "pump and dump" scheme was used. The token goes to the stock exchange, there the scammers sell it to themselves, gradually increasing the price. When a token grows, it will be sold. After that, it tends to get cheaper and buyers are left with losses. You can also “Pump up” the asset without buying and selling, just by information intervention. 

This scheme came at the dawn of the stock market era. The first case occurred in the early 18th century, when the British South Sea Company created an agitated demand for its shares, the price rose, and the stock went to buyers. It was a surprise when they found out that the company was worthless.

The “Pump…” flourished during the Great Depression years in the United States. Scammers pumped penny stocks, intensifying the economic crisis. At the same time, regulators began to fight this practice, and fought quite successfully.

Some Renaissance "Pump..." took place in the 1990s - the beginning of the 2000s, when against the background of the growth of the stock market, many inexperienced users entered the stock exchanges.

Now we are watching a new series of scammers' soap operas. Cryptocurrency turned out to be the perfect tool for pumping. Ethereum based token is relatively easy to release and conduct listing on the DEX exchange. And then it is a matter of technique.

It is not true that scammer tokens are in high demand. Indeed, they account for 54% of Ethereum tokens. However, their trading volume is only 1.3%. Anyway, this is a significant volume and it undermines the reputation of the crypto business.

This problem cannot be solved with the help of regulators - cryptocurrencies in principle are not easily amenable to external regulation. The only option is a joint action of market participants, the only way to organize effective mechanisms that provide protection from scam.

#CryptoManipulation #EthereumScams #MarketIntervention #PumpAndDumpCrypto #CryptoFraudAlert