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Pump-and-dump scams are increasing due to easy token creation and weak regulation on DEXs.
Billions in fake trading volume distort true crypto market activity.
Regulators worldwide are intensifying crackdowns on manipulative crypto trading practices.
Pump-and-dump scams in the world of cryptocurrencies happen when a group organizes to artificially raise the price of a lesser-known coin or token, then sells off their holdings at the high point. After those insiders sell, the price collapses, and late buyers suffer big losses. This kind of scam has roots in traditional markets, but the technological and social tools in crypto make it easier and faster to carry out.
These altcoin scams target small or newly launched currencies that have little trading activity or oversight. As large portions of the token supply are held by a few people, a small amount of money can push the price significantly. That makes it easier for those behind the scheme to control the market and extract profits.
In recent years, the sheer number of new tokens unleashed into the altcoin space has exploded. In 2024 alone, more than two million tokens were launched. Of those, about 42 percent became tradable on decentralized exchanges. Among newly launched tokens in 2024, roughly 3.59 percent showed trading patterns consistent with pump-and-dump schemes.
Looking back, earlier years exhibited even more extreme proportions of suspicious activity. In 2022, around 24 percent of new tokens matched characteristics often found in pump-and-dump cases. In 2023, manipulators were estimated to have made roughly $240 million by orchestrating price pumps in many small tokens. Meanwhile, the total value of illicit activity in crypto, including scams, frauds, and money laundering, is rising. In 2023, estimates placed that total at around $46.1 billion.
These numbers show that pump-and-dump schemes are not rare anomalies. They form a recurring, measurable fraction of new token launches and crypto trading behavior.
Creating a new token today is almost trivial. Tools and standardized smart-contract templates allow nearly anyone to spin up a new token in minutes at low cost. With minimal development, such tokens can be listed on exchanges and begin trading, even if they have no substantial track record. This ease of creation lowers the barrier for scammers, allowing many empty coins to enter the market.
Decentralized exchanges (DEXs) add to the vulnerability. These exchanges often allow tokens to trade without many rules, audits, or screening. Thanks to that openness, tokens with small liquidity pools and anonymous teams can easily be manipulated. A few large purchases can drive up the price, and insiders can later dump into that momentum.
Social hype plays a major role in fueling pump-and-dump attacks. Promoters use encrypted messaging groups, private communities, or social media to signal the next big wave for a token. These channels broadcast excitement, insider tips, or sometimes misleading claims. Many participants jump in late, driven by fear of missing out, unaware that they may be on the losing side.
Manipulators also use tricks like wash trading to create an illusion of volume and interest. Fake volume seduces others into believing the token is active and growing. In essence, a small team can manufacture momentum by layering false signals over a weak underlying asset.
Researchers have studied how these pump events work in detail. In many cases, the buildup (or accumulation) phase happens quietly. Then, a sudden, sharp spike in buying causes the price to surge. Soon after, insiders begin selling. The crash is often swifter and steeper than the rise, catching most later participants off guard.
Governments and regulators are starting to push back. In late 2024, US authorities charged 18 individuals and organizations for market manipulation practices, including wash trading and orchestrated pump-and-dump schemes. Some of those accused were market-making firms accused of helping clients manipulate token prices.
Legal regimes are evolving. Some regulators are applying existing securities or anti-fraud laws to token markets, demanding more disclosure or oversight. Legal tools once used in traditional financial markets are being tested and adapted for crypto. Meanwhile, analysts and academic groups are refining early detection methods. They monitor sudden shifts in trading volume, wallet clustering, abnormal price jumps, and social messaging patterns. These efforts aim to make scams riskier and harder to carry out undetected.
Even though the manipulated trades may form a small portion of total crypto trading volume, the damage can be severe. Many retail investors lose significant money when they buy during hype and sell during crashes. Confidence in new tokens or new projects may suffer as more people grow wary.
Repeated launches of suspect tokens by the same groups mean that threats never fully vanish. Some groups focus not on building long-lasting projects but on serial launches designed to be pumped and discarded. That behavior weakens the trust fabric of the entire token-launch ecosystem.
Many projects attempt real utility, governance, community building, or novel technology. The challenge is to distinguish legitimate efforts from ones built chiefly for exploitation. As token creation remains cheap, the bad actors always have a path to try new scams.
Also Read: What Is Cryptocurrency? Types, Benefits, Risks, Market Snapshot, & Trends in 2025 Explained
Pump-and-dump scams are flooding the altcoin market now as the conditions favor them. Creating tokens is cheap and fast. Oversight is weak. Social media and private messaging amplify hype. Tricks like fake volume mislead investors.
Even though regulatory and investigative pressure is growing, incentives for bad actors remain strong. Until stricter rules, better detection, and greater accountability become widespread, these schemes will likely continue to surface in the altcoin space.
1. What is a pump-and-dump scam in cryptocurrencies?
A pump-and-dump scam happens when a group artificially inflates a token’s price through hype or fake trading, then sells their holdings at the peak, causing the price to crash and leaving other investors with losses.
2. Why are pump-and-dump scams rising in the crypto market now?
These scams are increasing as creating tokens has become cheap and fast, decentralized exchanges (DEXs) allow easy listings without strict checks, and social media helps manipulators spread hype quickly.
3. How do pump-and-dump organizers manipulate the market?
They often use coordinated social media campaigns, private chat groups, and wash trading to create the illusion of demand, attracting unsuspecting investors to buy before dumping their holdings.
4. What role do decentralized exchanges (DEXs) play in these scams?
DEXs make it simple for anyone to launch and trade tokens without central approval. While this promotes innovation, it also allows scammers to list fake or low-quality coins that are easily manipulated.
5. How can investors protect themselves from pump-and-dump schemes?
Investors should research project teams, check trading volume patterns, avoid coins promoted through social media hype, and use verified exchanges with transparent listing standards.
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Disclaimer: Analytics Insight does not provide financial advice or guidance on cryptocurrencies and stocks. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. This article is provided for informational purposes and does not constitute investment advice. You are responsible for conducting your own research (DYOR) before making any investments. Read more about the financial risks involved here.
