Pamp and Dump: scammers on cryptocurrency exchanges
There is probably no one in the financial world who has not heard of cryptocurrencies: bitcoin and ether, litecoin and riple. However, not everyone knows that the number of cryptocurrencies is much more - at the moment there are 1465 pieces!
Most traders have never heard of many cryptocurrencies. Nevertheless, there are enterprising young people who are making real money even with cryptocurrencies that no one knows about.
Today let's talk about what a pamp and a dump on cryptocurrency exchanges are.
What are Pampers and Dumpers. Pampers and hamsters
The name of the Pump and Dump scheme comes from the English words "pump" - "pump", to inflate and "dump" - "dump". The scheme itself is not new; at one time, one of its variants was successfully applied by George Soros.
There are two types of participants in the scheme:
- The first are the direct participants, who are called pampers.
- The second type is the so-called, hamsters. By this we mean beginning traders or investors who do not have enough experience in stock trading.
At a strictly agreed upon time, pampers start buying cryptocurrencies en masse, causing their explosive growth. This is called Pump - artificial "inflating" of the rate. Inexperienced hamsters, seeing this trend, rush to "jump on the train" and start buying Pump coins en masse.
At the peak of the price occurs Dump - pampers begin to sell their assets, getting a good profit, and hamsters who bought cryptocurrency, as usual, close to the peak, remain with a loss.
Where you can meet cryptocurrency fraud
Since the Pump and Dump scheme is a scam and refers to exchange fraud, the top cryptocurrency exchanges fight it in every possible way. However, apart from the top exchanges, there are other exchanges that do not have such volumes, but are no less popular.
These are exchanges that crypto-traders themselves call "limitless" and "anarchic. Their main characteristics are:
- simplified registration system;
- No need for verification;
- Lack of financial regulation;
- lack of information about the owners of the exchange.
It is on such cryptocurrency platforms that little-known coins are traded, which are successfully used by scammers for Pamp and Dump.
Despite the seeming simplicity, you can't just start pumping some coin. Before every Pump, serious preparations are made: a certain coin is chosen, messages about its upcoming growth are published in exchange chat, on crypto-forums and in social networks groups. Pumping is a perfectly coordinated process, so cryptopumpers are united into appropriate groups.
The pampers community from the inside
Since we live in the 21st century, it would be foolish to believe that there is some secret room where pampers gather to do their dirty work.
It's much simpler than that. Pumper communities are common in the popular messenger Telegram, which, through end-to-end encryption, makes it possible to create closed channels and chats and keeps participants anonymous, despite the fact that a phone number is required when registering with Telegram.
Here is an example of one of the cryptopump channels:
Here's the pampers' community manual - very amused by the phrase "fair pamp."
Pumper communities are quite numerous - their Telegram groups have tens of thousands of people each. One of the most popular communities recently announced that it plans to attract users from Asia to Pampu, with a community size of about 60 thousand people. Can you imagine what a well-coordinated group of 60 thousand people at Yobit crypto exchange can do with a cryptocurrency like Bolivarcoin?
Don't be a hamster
At the moment Pump and Dump scheme on the cryptocurrency market is very common, due to its lack of effective regulation. And if crypto exchanges, which are in the field of financial regulators in the U.S., UK and Europe, more or less successfully resist it, on the "unlimited" exchanges you can both earn on pumping (but this is not certain), and lose your money on dumping (and this is absolutely certain).
To avoid becoming a victim of Pump and Dump, it is enough to adhere to a few simple tips:
- Do not trade unfamiliar or new cryptocurrencies, pseudocoins and other exotics;
- read cryptocurrency market news only from trusted sources;
- to appeals in exchange chat, on forums and social networks, such as "Urgently need to take ChtoPopaloCoin, while it is cheap! Tomorrow it will be 10 times more expensive - info 146%!" be more than skeptical;
- Do not take part in ICOs of companies about which there is no reliable information.
Unfortunately, the current reality is that cryptocurrency exchanges, especially "anarchic" ones, are not regulated by anyone. This means that the actions of pampers do not violate any laws and are not a crime. But this will hardly make you feel better if you lose your money as a result of Pump and Dump. Don't get involved in dubious ventures, take care of yourself, wear hats!