Pump and Dump
Coordinated altcoin price manipulation — insiders buy, hype attracts retail, insiders sell.
Pump and dump is market manipulation where an organized group coordinately buys an altcoin, spreads hype to attract retail investors, then sells profitably.
How it works: 1. Insiders quietly accumulate altcoin (low cap, little liquidity) 2. Coordinated hype launch (Telegram, Twitter, YouTube) 3. "Exclusive insider tip" 4. Retail FOMO buys 5. Insiders sell into FOMO volume 6. Price collapses -80-95% 7. Retail holds bags
How to recognize:
•Price sharply rises without fundamental reason
•Volume explodes before "news"
•Unknown influencers suddenly promoting
•Telegram groups with "signals"
•Project without clear use case
•Massive VC allocation
Legal status:
•Illegal on traditional exchanges (SEC regulation)
•Crypto — regulatory gray area, but SEC sued crypto P&D too
•Many influencers paid for promo without disclosure
Examples:
•John McAfee — paid for altcoin promos, charged with SEC fraud
•BitConnect — classic Ponzi/P&D scheme
•Many IEO projects in 2021
Protection:
•Don't react to "exclusive tips"
•Don't buy altcoin already 10x in a week
•DYOR before every purchase