{"id":6679,"date":"2020-01-18T09:55:14","date_gmt":"2020-01-18T09:55:14","guid":{"rendered":"https:\/\/qa-front.dev.techhub.cloud\/blog\/?page_id=2927"},"modified":"2024-04-17T12:31:57","modified_gmt":"2024-04-17T12:31:57","slug":"what-is-a-pump-and-dump-scheme","status":"publish","type":"glossary","link":"https:\/\/paybis.com\/blog\/glossary\/what-is-a-pump-and-dump-scheme\/","title":{"rendered":"Pump and Dump Scheme"},"content":{"rendered":"

Wondering what is a pump and dump scheme? In this short post, we explain how these fraudulent schemes work and how to avoid them.<\/span><\/p>\n

What is a pump and dump scheme?\u00a0<\/span><\/h2>\n

A pump and dump (PnD) scheme is the process of artificially inflating an asset\u2019s value by using false or misleading information in order to sell it at a much higher price.\u00a0<\/span><\/p>\n

The asset is always promoted with the help of marketing, which inflates the price (the pump).\u00a0<\/span><\/p>\n

Once the buyers take the bait and start investing, large bag-holders sell their coins at a high price making the price drop dramatically (the dump).\u00a0<\/span><\/p>\n

How does a pump and dump scheme work?<\/span><\/h2>\n

Pump and dump schemes are one of the major dangers for amateur cryptocurrency investors. It\u2019s important to detect it early<\/a> and avoid losses by buying in a PnD scheme.\u00a0<\/span><\/p>\n

PnD groups operate by convincing investors of an opportunity to get rich quick with some mostly-unknown cryptocurrency.\u00a0<\/span><\/p>\n

Misinformation is spread through social media, chat groups (especially Telegram groups) and sometimes even through well-known cryptocurrency news outlets.\u00a0<\/span><\/p>\n

In the background, scammers slowly acquire these coins for cheap. Once the price rises to a comfortable level, they crash the market and sell off their <\/span>positions<\/span><\/a>.\u00a0<\/span><\/p>\n

This leaves new investors with severe losses and cryptocurrency that is worth way less than their initial price.<\/span><\/p>\n

Some important signs to look for that might indicate a pump and dump:\u00a0<\/span><\/p>\n