Pump And Dump (P&D) Scheme
| Pump and Dump schemes are a type of deception in which false and misleading positive statements are used to artificially inflate the price of a cryptocurrency. In a typical Pump and Dump scheme, a group of individuals with inside information about a cryptocurrency begin buying it up secretly. Once the price of the cryptocurrency has been artificially inflated by the buying activity of the group, the group then begins selling off their holdings, cashing in on the inflated price. This selling activity causes the price of the cryptocurrency to crash, leaving investors who bought in at the artificially inflated prices with significant losses. Pump and Dump schemes are a serious problem in the cryptocurrency world, and have been responsible for artificially inflating the prices of many cryptocurrencies, only to see those prices crash soon afterwards. These schemes can be difficult to spot, as the group of individuals behind the scheme may be very good at hiding their activities. However, there are some red flags that can indicate that a Pump and Dump scheme is taking place. Some of the warning signs that a Pump and Dump scheme may be taking place include: -Sudden, unexplained spikes in the price of a cryptocurrency -A large increase in trading volume for a cryptocurrency -Promotional activity by a group of individuals or organization about a particular cryptocurrency If you see any of these warning signs, it is important to be very careful about investing in the cryptocurrency in question. Pump and Dump schemes can cause significant losses for investors, and so it is important to be aware of the risks before investing. |
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