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[freepik](https://www.freepik.com/premium-photo/money-loss_35132790.htm#fromView=search&page=1&position=8&uuid=acd9d9a5-d663-4b45-85f3-c7cab6291c37)|
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Hello guys, welcome back to this space, I hope y'all are keeping well... smiles. So today I've got something interesting to share with you again...by the way, hope you got value from my last post, I want to believe your response is "yes"...smiles.
Today we would be looking at the topic Pump-and-Dump scam, it's quite an interesting topic and of course the reason for sharing all of this is just to equip us with knowledge as to how this terrain works, kindly sit back and enjoy every bit of what I've got to share.
|**Introduction**|
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Every investor loves it when they see their investments rise. This is also applicable in the crypto space, there is this overwhelming joy you get when you see an asset you invested in appreciate appreciably. But then not all of this rise in the value of asset happens in line with the normal cause of event, most are artificially powered.
I want to believe we all know the literal meaning of **Pump**, it means to inflate something in such a way that it looks bigger than what it normally should. This practice is referred to as a fraudulent act. Anyways we would delve much deeper in this post...kindly tag along.
|**What is a pump and a Dump scam|
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Pump and dump scam is a dubious strategy adopted by some market player, which are sometimes a group of people who leverage one thinly traded asset by buying such asset at a very low price and then deploy their plot by spreading positive news about the asset they have invested in just to lure investors into it.
All they want to achieve with their aim is not to make the token grow steady, rather it's to dump the coin on unsuspecting investors who are lured into buying the asset which of course must have been artificially pumped to a very unbelievable percentage. Now as more investor flock around the asset based on the positive news or vibes around it, the asset begins to appreciate in value.
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|[freepik](https://www.freepik.com/free-vector/realistic-bankruptcy-concept_7474969.htm#fromView=search&page=1&position=9&uuid=acd9d9a5-d663-4b45-85f3-c7cab6291c37)|
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Once the price then pumps to a very significant level, the organizers sell off to those which are just coming in without knowing what the original plan was...which is to dump the project. They successfully dump the project and leave the unsuspecting investors with the bags.
Basically they are two method to this pump and dump scam, the first is the type where by the organizers creating vibes around the token to lure investors are equally on the back side of the project selling off on the unsuspecting investors who are already naive prey.
The second type is the kind that influence people to buy the token by employing influencers all around both on the Internet to lure their followers into buying the asset they have earmarked for their scheme and then wait for it to pump to an extent and then dump it on the new investor.
It's important to mention that the first pump and dump method can be carried out using any token while the second is done using token that are not popular and thin. If they can't find a suitable one for this course, they create their own token for this purpose, that's to tell you how desperate they are.
|**Red Flags to take note of**|
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If the identify behind such project is unknown, especially in a case where the token has just been created and hyped, you need to thread with caution. The reason why some of these folks will not put their identity out there is because they do not want to be researched of found out. They know what it mean to have a good or bad name.
Another red flag to note is that you need to check to know if the token have been seeing series of development especially if it has been around for sometime, if your finding is the reverse then you have to steer clear. A real project must have a clear goal, road map and purpose which should drive it. The absence of all this is already a red flag.
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|[freepik](https://www.freepik.com/free-vector/gradient-template-timeline-infographic_6402246.htm#fromView=search&page=1&position=3&uuid=74a26c61-fc2b-43cd-9b57-536f4888a6b7)|
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Another red flag would be when you noticed most influencer in your space talking about the same cryptocurrency on your social space. Am not saying they can't share their view about the token but then you need to be careful, it shouldn't be something you should quickly jump at or be all excited about. It calls for caution and deep research... because at the end of the day these influencers are settled when the plan play out well.
In addition, another thing you should be checking is where the token is traded. You have to check the exchange, most of these tokens are traded on exchange where there is less scrutiny or checks, making it easy for them to carry out their plots. This is not an 100% safety measure though but it sure adds up.
**Bottom Line**|
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Pump and dump scam is one of the oldest scam in the crypto world and as it stands, it will continue to thrive as long as we have folks who won't dedicate themselves to getting knowledge that would save them from this scheme.
Another reason why this scam will thrive is that it feeds on the greed of investors who loves to see pumps but forget the fact that it might have been artificially done and so a dump is around the corner. Let's just be careful out there guys.
I trust you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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