What is a cryptocurrency pump and dump scheme?


by mikel , in category: Cryptocurrencies , a year ago

What is a cryptocurrency pump and dump scheme?

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1 answer

by marion.bernhard , a year ago


A cryptocurrency pump and dump scheme refers to a manipulation tactic used in the crypto markets where a group of individuals artificially inflate the price of a particular cryptocurrency, known as "pumping," to attract more buyers and create a buying frenzy. Once the price has been pumped up to a certain level, the group will quickly sell off their large holdings of that cryptocurrency, known as "dumping," resulting in a significant price drop. This scheme allows the orchestrators to make a considerable profit by selling at the peak while leaving other investors with losses. Pump and dump schemes are highly illegal in regulated financial markets as they constitute market manipulation and fraudulent activities.