Pump & Dumps

Twitter and the rest of the crypto-trading-sphere is full of pump’n’dump advertisements. Do not participate! Let me explain how it works and how you are cheated.

For the naive audience there are announcements like “Pump tonight at 6pm EST”. You are invited to a chat room or simply to follow on twitter. At the announced time a certain coin is called and you should buy them, so the price rises. As more people join in, the price rises even further. Then you quickly sell again at a higher price and make a profit. Of course, some are losing out as the price is already fallen again.

How a pump&dump looks afterwards. A short big spike.

This is just the public story though. In practice, it is impossible to profit from such invitations. The only one who really profits is the one who manages the action. He as already bought lots of coins before the pump. Slowly and in small portions, so the price stays low and nobody notices. Then he creates lots of sell offers and announces the pump. All people who join are paying him off.

There are lots of those pump’n’dumpers on Twitter. If you ignore them or do the opposite of what they tell you, you are fine.

Sometimes there are more advanced schemes. I created a Twitter list: Pump&Dump Black List. Consider all these accounts as shady and be really careful doing business with them. Also, help me to complete the list. It is most certainly not complete yet.

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7 comments

  1. Pingback: Innovation Is Overrated | Crypto Frenzy
  2. Pingback: Golden rules for newbies pt. 2: Don´t trust for nothing – make up your own mind | A Million Quarks

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