Pump and Dump: The most common scam in crypto that can ruin you

If you've ever experienced an unknown coin skyrocketing 300% in hours and then collapsing, you probably witnessed a pump and dump in action. Let me explain how this scam works and, more importantly, how to avoid falling for it.

The cat and mouse game

Basically, scammers buy a low-cap coin with little volume (the easiest to manipulate). They then launch a massive campaign on Telegram, Discord, Twitter: “This coin is going to explode”, “once-in-a-lifetime opportunity”, “we will generate 100x in a week”. The FOMO does its job: thousands of retail investors buy thinking they will miss the next Shiba. The price skyrockets.

Then, when it reaches the peak, the scammers dump everything at once. The price plummets. Those who entered late lose everything. The scammers make millions.

Why does it work in crypto?

Three simple reasons:

1. Lack of regulation - Unlike traditional markets, there is less oversight in crypto. It's easier to get away with it.

2. Low liquidity - Small coins move easily. A large buy raises the price, a large sell destroys it.

3. It is decentralized - There is no one watching. Literally.

The warning signals you should see

Influencers suddenly talk about a rare coin - If that trendy account that never talks about crypto suddenly recommends a token, something smells fishy. Scammers pay influencers to promote.

Unusual price increases without reason - An unknown coin rises 500% in a week without any major announcement. Red.

The project has no real development - Check the code repository. Is there activity? Does it have a serious whitepaper or is it just smoke? If the team is empty or doesn't exist, run away.

It is promoted only in closed groups - If you have to be in a private Telegram to “be part of the opportunity”, it is a pump and dump.

Unrealistic promises - “Guaranteed 1000x in 3 months”. No one can guarantee that. Period.

How to protect yourself

Research first - Look for the whitepaper, check who is behind the project, verify if it has real presence (website, active development, identifiable team).

Beware of FOMO - The worst decision in crypto is to buy because “everyone is doing it”. Quick profits are usually a trap.

Go to the source - Do not trust third-party recommendations. Access the official site and verified social media directly.

Liquidity is key - If the coin is on good exchanges ( not on strange DEXs ), it is likely to be safer. Pumps prefer coins on lesser-known exchanges where they can control the price.

Beware of sharp spikes - If a coin rises 300% in a day without news, investigate why. It could be the dump.

The conclusion

The pump and dump does not disappear. It will continue to exist as long as there are greedy retail investors entering without thinking. The difference between losing everything and surviving is simple: do your homework before investing and avoid FOMO like the plague. In crypto, research is your best defense.