Pump and dump schemes have been prevalent way before crypto was invented, but with modern technology investing has become easier than ever, meaning scamming people has also become easier than ever!

What Is A Pump & Dump Scheme?

Pump and dump schemes are a type of investment scam in which the asset holder attempts to boost the price of the asset through fraudulent means before quickly selling it and making a profit.

Asset holders use a range of tactics such as false claims and made-up figures to get people to invest in their assets hoping for a return (the pump), then the asset owners sell off all their shares (the dump), leaving the investors with a worthless asset.

titan coin chart

10 Signs your next crypto is a pump and dump

1. The owners are anonymous

The number one rule of investing is to do your research, however, this becomes very hard to do if you are investing in an unknown entity.

A lot of these crypto project owners hide behind fake Twitter profiles and use other people to promote their coins on social media to avoid being linked to the scam. If you don’t know who’s running the project, you might not want to bet your life savings on it.

thief at computer

Source: Unsplash

2. There’s a sudden rise in non-crypto creators promoting it

If your favourite fashion influencer is promoting a crypto coin, you probably want to avoid it and any other associated coins for the near future -especially when you realise that most of these creators are being paid (whether they add the #ad to their posts or not).

Celebrities are also financially incentivized to promote these projects, but if we look at some of the most popular ones they do not usually do well.

vips involved in crypto

Source: https://slate.com/technology/2021/10/ben-mckenzie-crypto-celebrities-kardashian-brady-lohan.html

3. The coin does not actually serve a purpose

Most crypto projects have a white paper, which is an informational document issued by a company to highlight the features of the project. If you read the company white paper and realise that the project doesn’t solve any problems, then it probably won’t solve your problems either, or make any legitimate money.

If they don’t have a white paper then you probably want to avoid putting any money into it.

garbage cans

Source: Unsplash

4. All the promoters are heavily invested in it

When you find people that are very passionate about promoting a project, you might want to check whether they own a large stake in the project because that will probably explain why they are promoting it as if it’s the next Facebook.

hands with dollar bills

Source: Unsplash

5. The project experiences a sudden unexplained rise in value

POV: You are excited about this new project because your cousin just invested £100 yesterday and now it’s worth £200!

Well, unfortunately, you both could be moments away from losing all your investment – usually, people that invest during the pump stage think that the coin is only going to go up, which is exactly what the project owners want you to think before they pull the rug from under you.

app with crypto chart

Source: Unsplash

6. The owners actively block any criticism or negativity around the project

A lot of these crypto projects nowadays have private communities on platforms like discord where they heavily promote the project by promising everyone financial gains.

Everyone in those communities seems to be super positive about the project, but that isn’t because the project is any good, it’s because they employ moderators that weed out all the negativity to keep the mood high and keep the investors flocking in.

be positive

Source: Unsplash

7. They only have paid news coverage

No credible site will ever cover a scam!

Unless they pay them, of course. If you find that the only coverage a project or project owner is getting is paid for, it might be a sign that no one cares about what they are doing or that they can see that they are a scam. Either way, you want to avoid putting money into their projects.


Source: Unsplash

8. No one is really developing the project further

If you notice that most of the time is spent promoting the project rather than developing the project, the owners might care more about your money than building a successful project.

Real business owners spend a lot of time worrying about how to make the business better rather than promoting an unfinished product.

showcase for sale

Source: Unsplash

9. They don’t appear on the credible crypto exchanges

If you don’t find any clear red flags, you might want to check if it’s available on well-regarded crypto exchanges as these platforms do a good job of weeding out the scams.

It is worth saying that pump and dump schemes still exist on these platforms as it’s impossible to find out which is a scam until they’ve dumped the coin.

crypto.com homepage

Source: Unsplash

10. The owners or promoters were involved in previous scams

When you hear about a new project, it’s worth giving the founders and promoters a quick Google Search to make sure they weren’t involved in any previous scams. Just put the name then the word scam next to it and you should find any headlines if they did partake in scams before.

However, some of these founders create their own websites to counteract this by using fake reviews – make sure to check a few credible sources before you make your judgement.

google search homepage

Source: Unsplash

Are All Crypto Projects Scams?

Not all crypto projects are scams, but investors must be able to recognize which ones might be.

Generally, the crypto projects that might hide shady intentions are those that offer low-cost tokens with very low market capitalization.

Unlike established cryptocurrencies, these tokens are not even listed on major cryptocurrency exchanges, as a result, obtaining them often requires following multiple steps that could also hide a malicious intent.

However, like every investment, crypto projects have inherent risk so only invest what you can afford to lose. You can also find out more about all the other types of trading scams by reading our article.

filippo ucchino

About The Author

Filippo Ucchino
Co-Founder - CEO - Broker Expert
Filippo is the co-founder and CEO of InvestinGoal.com. He has 15 years of experience in the financial sector and forex in particular. He started his career as a forex trader in 2005 and then became interested in the whole fintech and crypto sector.
Over this time, he has developed an almost scientific approach to the analysis of brokers, their services, and offerings. In addition, he is an expert in Compliance and Security Policies for consumers protection in this sector.
With InvestinGoal, Filippo’s goal is to bring as much clarity as possible to help users navigate the world of online trading, forex, and cryptocurrencies.

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