How To Identify A Crypto pump and Dump
Understanding crypto pump-and dumps
The crypto industry remains the Wild West. There are dozens of exchanges, and it’s relatively easy to issue a new cryptocurrency. Therefore, it’s a breeding ground for thinly traded currencies and scammers who can pump and dump those assets.
Typically, a pump-and-dump crypto scheme starts with an organizer gathering influencers in a private group online. They’ll coordinate buying the target crypto asset to avoid price spikes. Once they’re ready to pump the asset and get the general public to buy in, the influencers will share information about the trade with their followers on social media. The organizers will then coordinate the sale, e.g., the dump, in order to get everyone paid, leaving the public investors holding the bag.
What makes crypto especially susceptible to this ploy is that organizers don’t have to search very hard for thinly traded crypto assets. They can just create them. The barrier to entry for creating a new cryptocurrency is just a little bit of research and coding knowledge.
Furthermore, newly formed cryptocurrencies are largely unregulated. A person or group can create a token and make wild claims about its use, and it’s unlikely they’ll face repercussions when those claims turn out to be nothing but false promises.
For example, several members of FaZe Clan, an esports and influencer group, promoted a new cryptocurrency called SaveTheKids in the summer of 2021. The coin promised to help children around the world, but it turned out to be no more than a scam. The organizers and influencers made off with tens of thousands of dollars, and their followers ended up with a worthless crypto token. Needless to say, no kids were helped.
How to spot a pump-and-dump crypto scam
It’s easy to identify a pump-and-dump crypto scam after the fact. But that doesn’t do cryptocurrency investors much good when the rug’s been pulled and they’re left holding the bag. It pays for investors to know the signs of a potential pump-and-dump scam before it actually happens.
The first step in avoiding a pump-and-dump scam is to do your research. If you see a relatively unknown cryptocurrency being touted by internet strangers, don’t rush to get in. Look up the token, find its white paper, and read through it. Determine who’s behind it and what the objectives are. You should do this for any cryptocurrency to determine if there’s long-term potential for it to increase in value.
If the token has been around for a while but development on the project seems to have disappeared, it’s best to avoid it. If the project has no clear purpose, it purports benefits that seem unrealistic, its development roadmap isn’t well thought out, or it’s associated with previous bad actors, those are all red flags, too.
If you don’t typically follow influencers in the finance space, specifically cryptocurrency experts, but all of a sudden the people you follow are talking about a cryptocurrency, that’s another big red flag. Ask yourself why this fashion influencer you follow is talking about some cryptocurrency.
If you do discover a potential crypto investment on social media, it’s best to check out whether the project has its own website and social media presence. Go straight to the source instead of relying on information from third parties.
If you don’t find any red flags in the documentation or in how the investment is being promoted, take a look at how the cryptocurrency trades. If it’s on a well-regarded exchange, it’s more likely to be a safer investment. If you have to dig into some unknown DeFi exchange, you’ll want to dig deeper into the order book.
Most exchanges will show you all the open orders for an asset, as well as the order history. Check the pattern on trading volume. If it’s spiked recently and volume appears to be trending higher, be cautious. If you see big walls of the crypto asset on the buy side, there’s potential that a big group is making sure the price of the coin doesn’t fall below that price. Likewise, you may see big walls of sellers to make sure the price doesn’t pump too fast as the organizers pile into the coin.
If you suspect a cryptocurrency is undergoing a pump-and-dump scam, it’s best to avoid it. It’s impossible to know without inside information when the organizers plan to sell. If you do have inside information, though, you’re probably better off contacting the Commodity Futures Trading Commission (CFTC)and providing the information to them.
The CFTC put out an advisory in late 2019 to warn investors about potential pump-and-dump scams. It’s offering bounties to any whistleblowers. That means you don’t have to do anything illegal, and you might make more money by being an informant.
Can You Profit from Crypto Pump and Dump?
Pump and dumps result in large swings in price movement, which can produce large gains. Profiting from pump and dumps, even unknowingly, is possible if you’re on the right side of the trade. If your timing isn’t right and you get caught on the wrong wave, you might have trouble profiting from pump and dumps.
Spotting a pump and dump strategy requires having enough confidence that the group you’re following will be first to the punch and artificially inflate prices. You’ll also need to be able to exit the trade in time to make money.
To minimize losses, you can set a trailing stop loss that helps you exit a position in case prices quickly move sharply downward. This means setting a sell order at a specific price to keep any losses minimal, removing your position in the coin. Otherwise, if you hold on to a position for too long and exit slowly, you may end up a victim of falling prices from the dump.
Is Crypto Pump and Dump Illegal?
With all the news and hype around cryptocurrencies, aren’t there laws in place to protect consumers? The answer is: yes and no. Most countries have some laws on the books regarding intentional fraud.
For example, in the United States, the Federal Bureau of Investigation (FBI) has an internet crime complaint center which monitors online fraud. However, due to the nature of cryptocurrencies, it’s hard to nail down which body regulates them. Depending on the regulatory agency, a cryptocurrency can be considered money, property, security, or a commodity. This means it’s regulated by either the Internal Revenue Service (IRS), the Commodity Futures Trading Commission, the Securities and Exchange Commission, or the Financial Crimes Enforcement Network (FinCEN).
Pump and dump schemes are illegal in stocks. But in general, current laws regarding pump and dump schemes don’t apply to cryptocurrency exchanges and coins that aren’t classified as securities. This could change in the future, but for now, the regulatory vacuum creates a gray area in which pumps and dumps operate in cryptocurrencies.
One possible hangup right now for schemers in the U.S. The IRS has been tasked with overhauling how it looks at capital gains, so perpetrators of the schemes may run into issues if they don’t pay taxes on their ill-gotten profits.
The points you put forth in this article are definitely exact, intelligent and valuable. I am in agreement with many statements you make. Great job!
A big thank you for creating such an interesting article on this subject. I hope to enjoy additional posts published by you, in the coming weeks.
Good on you for investing the time in that which you publish, and so boosting the high level of quality.
Outstanding post! It’s rare to find someone on the internet who can write at your level. I hope lots of people pursue the opportunity to read your valuable content.
I’ve recently reviewed multiple opinions pertaining to this topic but you have presented some interesting points. Despite my thinking there is no more to investigate, it seems you have revealed me to be wrong.
Applause for putting the effort into what you publish, and so boosting its high level of quality.
You should guarantee that your cover letter attracts your potential employer, presents you in the most positive light, and entices them to review your resume so they will want to contact you for an interview. Because of the immense volume of resumes received for every employment offer in today’s market, a professional cover letter often becomes the sole selection factor leading to whether you score an interview – or get thrown into the garbage!
Today’s hiring decision-makers don’t look at every one of the five hundred or higher resumes they get – for just one employment opening! Instead, they’ll instantly throw away 90 of them, if any resume does nothing to capture the reader’s attention.
Long time ago, job seekers were lectured that our resume should have a list of point-form duties and responsibilities beside any occupation we have ever done – and the bigger the list the better. Not anymore! Nowdays, hiring decision-makers will only devote 10 seconds (sometimes not even that) when glancing through your resume. Don’t follow the Duties-and-Responsibilities resume format!
You have apparently put in a significant amount of effort for the purpose of producing a high quality, useful web site. It is appreciated. 🙂
Resume snippets like “highly skilled”, are a problem. They appear cliche and don’t present you in a positive light. The same is true of a term like “dedicated”. The proper phrases emphasize what you did while working for your previous companies plus how valuable you could be to this future hiring decision-maker.
The statements you make in this content are certainly clear, interesting and valuable. I agree with several statements you make. Great job!
Sticking to the Duties-and-Responsibilities resume format, will guarantee that your resume is thrown into the garbage! Organizations no longer care what you were responsible for at previous jobs. In today’s hiring market, they have to see what verifiable accomplishments you have made.
Here is a very quality post. I shall be careful to fave it and come back to read more of this valuable reading material. My thanks for posting this – I will make sure to return to see lots more posts.
I wish other writers of this kind of content would invest the effort you have done, to research the topic so well. Great job!
Resume snippets like “professional”, are damaging. They make you sound cliche and don’t position you in a positive light. Similarly for a term like “dependable”. The correct terms point out things you did while working for your former companies and also how valuable you would be to this prospective organization.
Great post, I really enjoyed it! Is it possible to write more in a follow-up post, such that you could expand a little bit further?
In today’s job market, employers won’t pay attention to each of the four hundred or higher resumes they get – per employment posting! In actual fact, they’ll happily discard 95 of them, if any resume does nothing to grab their interest.
I am placing your article in my bookmarks list to come back again. You offered valid points within this article which I feel require more detailed investigation. And I agree with most of this information.
Selecting the duties/responsibilities resume technique, will guarantee that your resume is dropped on top of the garbage pile! Organizations are not interested in what you did at prior employers. In actual fact, they must see the Points Of Difference you have made.
Very good article! It’s rare to find someone on the internet who can write with your prowess. I hope lots of viewers pursue the chance to see your useful content.
Enjoyable post, I really liked it! Is it possible to come up with more in a subsequent post, so that you could clarify a bit further?
Did you know that four of every five available jobs (and specifically pretty-well 100 of the top work), are only accessible inside the “hidden” employment market. This means the key to boosting your success, is to find out the principal reasons the best employment are available only within this little-known employment market, and not the pathetic print media or online job market.
There’s a bunch of info in this article which I wouldn’t have realized myself. My gratitude for your valuable info.
Are you aware that four of every five job postings (and specifically almost 100 of the highest-paying positions), are only available via the “hidden” career market. Which means the power pathway to boosting your pay level, is to discover the most common reasons the top jobs are promoted inside this little-known job market, but rarely the pathetic paper media or cyberspace job market.
It is tough to locate writers who know what they’re lecturing about across the net, but you appear to know this subject quite well. That is certainly a welcome relief, amidst the widespread “pathetic” internet content. Thank you!
Excellent article! I’d love to be able to write with your prowess. I hope many readers enjoy the chance to see your excellent content.
Long ago, all resumes opened by composing an Objective Statement – but no more! In today’s job market, career specialists all agree, these types of resume sections do nothing when determining your occupation abilities. Thus, be certain to not write an Objective Statement!
In the current job market, companies expect to be told the unique job title you are hoping to apply for – but a general resume never shows this. And beyond that, they quickly need to figure out what positively makes you a better choice – but a general resume compels you to appear like a clone of the tons of general resumes they have already had dropped on them.
Today’s employers will not pay attention to every one of the 400 plus resumes dumped on them – for a single employment posting! Alternatively, they’ll quickly toss aside ninety percent of them, if that resume does nothing to seize the reader’s attention.
There’s a group of info in this material which I would not have come up with on my own. Much appreciation for your clear info.
Don’t lose the job by submitting a general resume! All a general resume does, is tell them how you fade into the crowd – not how you stand above your competition for the same job.
You need to ensure that a professional cover letter hooks your potential employer, verifies your suitability for the job, plus leads them to review the resume so they will want to choose you for an interview. With the large amount of resumes received for every employment offer in today’s market, the cover letter often becomes the key determining factor choosing if you win an interview – or get discarded into the garbage!
I think I like this writing style and in addition the way you present your thoughts. Cudos!
Insisting on the duties/responsibilities resume template, will make sure that your resume is dropped on top of the garbage pile! Hiring decision-makers no longer care what you were assigned to do at past employers. In today’s hiring market, they have to be shown the verifiable accomplishments you have made.
As you are looking for employment, first impressions are top priority! And the best first impression hiring decision-makers see of you – is a professional cover letter.
It’s difficult to locate those who truly know what they’re talking about on the net, but you appear to know this subject well. That’s definitely a breath of fresh air, from the typical “stinky” internet content. Thanks for this!
In today’s job market, employers do not review all of the five hundred plus resumes dumped on them – per job offering! The fact is, they’ll immediately discard ninety percent of them, if that resume does nothing to seize their attention.
Long time ago, job hunters were told that every resume must have a collection of bullet-point duties and responsibilities performed during each work position we have ever had – and the larger the amount the better. Not today! Today, hiring decision-makers are going to only devote a few seconds (maybe even less) when glancing through your resume. Don’t choose the duties/responsibilities resume approach!
If you are trying to get employed, first impressions are everything! And the most frequent first impression employers read about you – is your cover letter.
Great site, nice design – really clean as well as pleasant to read.
Years and years ago, job seekers were told that the resume needs to contain a collection of bullet-point duties and responsibilities underneath every work position we have ever had – and the greater the volume the better. Not anymore! These days, companies are able to only take fifteen seconds (sometimes not even that) when initially evaluating your resume. Do not follow the duties/responsibilities resume approach!
Way back in the past, job searchers were taught that your resume should contain a group of bullet-point duties and responsibilities for every work position we have ever occupied – and the more the better. Not today! Currently, organizations plan to only take fifteen seconds (or less) when scanning through your resume. Do not choose the Duties-and-Responsibilities resume template!
You’ve made some powerful points here. It would be good if a great number of surfers encounter this content.
Long ago, every resume commenced by writing an Objective Statement – but not any more! Current hiring specialists all state clearly, these types of resume sections contribute nothing when determining your employment capability. This means, be certain to not include an Objective Statement!
Your article helped me a lot, is there any more related content? Thanks! https://accounts.binance.com/cs/register?ref=W0BCQMF1
Enjoyed looking through this, very good stuff, appreciate it.
Magnificent site. Lots of useful information here. I¦m sending it to several buddies ans additionally sharing in delicious. And of course, thank you for your sweat!
I and also my friends were found to be checking out the best guides from your site and before long I had an awful feeling I had not thanked the web site owner for those secrets. Those men came so happy to study all of them and already have without a doubt been tapping into those things. We appreciate you indeed being so helpful and for going for these kinds of beneficial tips millions of individuals are really desirous to learn about. My very own sincere apologies for not expressing gratitude to sooner.
I got what you intend, appreciate it for putting up.Woh I am lucky to find this website through google.
Awsome website! I am loving it!! Will be back later to read some more. I am bookmarking your feeds also.
Hi , I do believe this is an excellent blog. I stumbled upon it on Yahoo , i will come back once again. Money and freedom is the best way to change, may you be rich and help other people.