A pump and dump as it is referred to in both the securities and cryptocurrency marketplace; is when a stock, share or cryptocurrency is artificially bolstered through lies and deception. This can come in the form of fake positive news and statements in order to create excitement among rookie and sometimes seasoned investors. The hope is they buy into a particular stock, share or crypto. Once this occurs the price of (lets call it the ‘crypto’ for ease of explanation) goes up dramatically then the person or ‘pump and dumpers’ who already own bags (‘bags’ is another term for holding a position in a crypto, stock or share) sell their bags or ‘dump’ at the top price of the market. This leaves the investors with bags they have to either sell for a loss or hold until the market recovers back to their buy in price.
These pump and dumps use all the normal scam avenue’s to push their agenda including but not limited to:
- Email spam like MailChimp
- Media Channels using fake news releases or FUD (fear uncertainty and doubt)
And the list goes on.
Pump and dumpers are seen by the community at large as scam artists or fakes and are highly frowned upon. Those caught or thought to be pumping and dumping usually try to prove otherwise and if they can’t then they risk their integrity within the community. It really pays to use due diligence and DYOR. ( Do your own research! ) Cross reference news and as always if its too good to be true then stay away!