The world of cryptocurrency is not free from scams and manipulations. Pump and dump schemes are among the most common types of frauds in the crypto market. In this article, we will discuss some of the most notorious pump and dump crypto examples.
What is Pump and Dump Scheme?
Pump and dump is a type of market manipulation where a group of people artificially inflate the price of a particular asset, such as a cryptocurrency, through false or misleading information. Once the price reaches a certain level, these individuals sell their shares, causing the price to plummet, and unsuspecting investors to lose their money.
Notable Pump and Dump Crypto Examples
Bitconnect was a cryptocurrency that was launched in 2016, which promised investors high returns through a lending program. The company was accused of being a Ponzi scheme, and in 2018, the Texas Securities Board issued a cease and desist order against the company. The price of Bitconnect reached an all-time high of $463 in December 2017, but by January 2018, it had dropped to less than $10.
2. Centra Tech
Centra Tech was a blockchain startup that claimed to offer a debit card backed by Visa and Mastercard. The company was endorsed by celebrities such as Floyd Mayweather and DJ Khaled. However, the SEC charged the company and its founders with fraud in 2018, alleging that they had raised $32 million through an illegal ICO. The price of Centra’s token, CTR, reached an all-time high of $5.47 in December 2017, but by April 2018, it had fallen to less than $0.02.
Verge is a privacy-focused cryptocurrency that was involved in a pump and dump scheme in 2018. A group of traders on the messaging app Telegram coordinated a campaign to buy Verge, which caused the price to surge. However, the price quickly fell after the group sold their tokens. Verge’s price reached an all-time high of $0.23 in December 2017, but by April 2018, it had fallen to less than $0.04.
How to Avoid Pump and Dump Schemes
It is essential to conduct thorough research before investing in any cryptocurrency. Investors should look for projects that have a solid team, a clear roadmap, and a real use case for their token. Additionally, investors should be wary of any project that promises high returns with little effort or has celebrity endorsements.
Pump and dump schemes are a prevalent type of market manipulation in the cryptocurrency market. Investors should be aware of the risks and take the necessary precautions to avoid falling victim to these scams. By conducting thorough research and being cautious, investors can protect themselves and their investments from pump and dump schemes.