The credit for the rapid emergence of cryptocurrency could be safely given to social media. But as they say, social media is both a boon and a curse. Well, it is also true in the case of the crypto industry. Popular social hangouts such as Twitter, TikTok, and Reddit often become the target of fraudsters, who carry out the frauds called the pump-and-dump. Though these scams exist in the entire finance sector. They are awfully common in the crypto industry.
In pump and dump schemes, also known as “rug pulls,” the hackers vanish the investor’s money in a blink of an eye. As per research from Chainalysis, in 2021, these Ponzi schemes took around $2.8 billion worth of cryptocurrencies. It accounted for 37% of crypto scam revenue of the year. But, what exactly are these pump-and-dump schemes? And, how can we save ourselves from it? Let’s find out:
What Is Pump-and-Dump Fraud?
Pump-and-dump is a fraud scheme. Bad actors running these fraudulent schemes misled investors into buying falsely inflated tokens. Then, they sell these shares at higher prices. These pump-and-dump schemes pretend to have real-world use-cases or guarantee high lucrative returns. Investors often get swayed by these causes.
How To Avoid Pump-And-Dump Frauds?
There is no sure-short way to tell if a crypto project is a pump-and-dump fraud. However, there are some ways through which you can avoid these frauds:
Do Your Own Research
The best way to avoid a pump-and-dump fraud in crypto is…
