Feb 18, 2023

Investors Lose $4.6B in Suspected Crypto “Pump and Dump” Schemes

Cryptocurrency investors have been warned to be aware of the potential for pump and dump schemes, after a blockchain analytics firm estimated that $4.6 billion worth of crypto tokens were suspected to be part of such schemes in 2022.

A Feb. 16 report from Chainalysis, which “analyzed all tokens launched” in 2022 on the BNB Smart Chain and Ethereum blockchains, found that over 9,900 tokens bore characteristics of a “pump and dump” scheme.

In a pump-and-dump scheme, the creators typically use misleading statements and hype to persuade investors to buy tokens while secretly selling their own stake in the scheme at inflated prices.

Chainalysis estimated that investors spent $4.6 billion buying the 9,900 suspected fraudulent tokens, and that one prolific creator is suspected of launching 264 such tokens last year.

The firm classified a token as potentially being part of a pump and dump scheme if it had a minimum of 10 swaps and four back-to-back days of trading on decentralized exchanges (DEXs) in the week after its launch. Of the 1.1 million new tokens launched last year, only 40,500 fit the criteria.

Chainalysis estimated that just 445 individuals or groups are behind the suspected pump-and-dump tokens, and that they made $30 million in total profits from selling their holdings.

The firm noted, however, that in some cases, teams involved with token launches may have done their best to form a healthy offering, and the subsequent drop in price was simply due to market forces.

Despite the concerning statistics, Chainalysis also noted that revenues from crypto scams were cut almost half in 2022 largely due to depressed crypto prices.

In light of these findings, investors should be aware of the risks associated with buying tokens, and should consider seeking advice from a web3 agency or NFT marketing agency before investing in any crypto-related project.

It is also important to be aware of the potential for pump and dump schemes, and to look out for any suspicious activity such as sudden price surges or suspicious Twitter NFT marketing campaigns.

Finally, investors should remember that it is always possible to lose money when investing in crypto, so they should never invest more than they can afford to lose.

Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.