Pump and Dump
A fraudulent scheme where coordinated groups artificially inflate a cryptocurrency's price through false hype, then sell their holdings at the peak, leaving other investors with losses.
Last updated: January 5, 2025
What is a Pump and Dump?
A pump and dump is a market manipulation scheme where a group artificially inflates (“pumps”) a cryptocurrency’s price through coordinated buying and misleading promotion, then sells (“dumps”) their holdings at the inflated price, causing the price to crash and leaving late buyers with significant losses.
How Pump and Dumps Work
Phase 1: Accumulation
- Manipulators quietly buy a low-cap coin
- Build large position at low prices
- Typically target low-liquidity tokens
Phase 2: Promotion (The Pump)
- Aggressive social media campaigns
- Fake news and hype
- Telegram/Discord group signals
- Celebrity endorsements (often paid)
Phase 3: Distribution (The Dump)
- Price spikes attract FOMO buyers
- Manipulators sell into the buying pressure
- Price collapses rapidly
- Late buyers left holding worthless coins
Warning Signs
- Sudden unexplained price spikes
- Heavy promotion in Telegram groups
- Anonymous teams or influencers
- Promises of guaranteed returns
- “Get in now before it’s too late”
- Low trading volume before the spike
How to Protect Yourself
- Avoid FOMO: If you see massive gains, it’s often too late
- Research first: Check project fundamentals
- Ignore “signals”: Paid groups profit from your losses
- Check liquidity: Low liquidity = easy manipulation
- Question hype: Legitimate projects don’t need aggressive shilling
Legal Status
Pump and dumps are illegal in most regulated markets. In crypto, enforcement is limited, making self-protection essential.
Trade on reputable exchanges like Coinbase and Kraken that list vetted projects.
Ready to Start Trading?
Now that you understand pump and dump, explore the best exchanges to begin your crypto journey.