What is a Crypto Pump-and-Dump?
A crypto pump-and-dump is a market manipulation scam where perpetrators create or obtain large amounts of an altcoin, promote it to fraudulently inflate (pump) the token price, and then cash out by selling (dumping) them to unsuspecting investors.  Â
When perpetrators dump their tokens, the supply increases as the price decreases. Since many of these assets have little to no value, their prices will not recover after the scammers dump their holdings. In other words, innocent investors are stuck with nearly worthless tokens while the fraudsters count their loot.Â
Pump
The next stage is the pump. This means the list of doomed victims has already bought in, which causes the price of the asset to skyrocket. At this point, those who missed out on the pre-sale often feel like theyâve missed out. But there lies the folly. The more latecomer investors buy in at higher prices, the higher the price climbs. And unfortunately, thatâs exactly what the scammers are planning.
Dump
Once the token price has reached a level the scammers deem profitable, they coordinate and dump their holdings simultaneously. This massive sell-off causes the tokenâs supply to far exceed its demand thereby tanking the price. This, in turn, causes panic among investors who also rush to sell. But for them, itâs already too late: the tokens have no value. All of the tokenâs liquidity is drained, leaving the scammers with a huge profit and the unlucky investors with worthless digital assets they cannot sell.
