Almost a quarter of new cryptocurrencies launched in 2022 exhibited characteristics of “pump and dumps”—a form of fraud—according to new analysis from blockchain intelligence group Chainalysis.
Pump and dump tactics have a long history in the stock market, where they are a form of securities fraud.
In “pump and dump”, investors will hold a stock and promote it to pump the price, and then dump it at inflated levels on unsuspecting investors who buy in on the hype before it all comes crashing down.
This is a classic example of the “The Greater Fool Theory”.
Unsuspecting buyers plowed $4.6 billion into tokens that were likely pump and dump schemes last year, according to Chainalysis. https://t.co/vVolzHhRp4
— Barron's (@barronsonline) February 16, 2023
References: