A Pump and Dump scheme in cryptocurrency is a form of market manipulation where the price of a cryptocurrency is artificially inflated (the "pump") through misleading or false information, hype, or coordinated buying by a group of people.
Once the price rises significantly, the organizers of the scheme "dump" their holdings by selling them at the elevated price.
This sudden sell-off causes the price to crash, leaving the majority of investors, who bought during the pump, with heavy losses.
Typically, pump and dump schemes are more common with small, low-market-cap cryptocurrencies that are easier to manipulate.
These schemes are illegal in traditional markets but can be harder to regulate in the decentralized and often unregulated world of crypto. Scammers often use social media, chat groups, or private forums to coordinate these schemes and lure in unsuspecting investors.
