Pump-and-dump schemes in Web3 follow a pattern. A small group buys large amounts of a little-known token. Then, they spread fake news, edited videos, or fabricated social media posts to make it appear as though something major is about to happen. This draws in ordinary investors, who rush in and buy, pushing the price higher. Once the price peaks, the original group sells everything at a profit. The price crashes, and most late buyers lose nearly all their money. These schemes leave no trace of who started them.
Why do pump-and-dump schemes work in Web3?
The crypto market attracts such tactics because it runs nonstop. There are no breaks, no centralized control, and no strong rules to stop market manipulation. Traders from anywhere in the world can launch or buy a token without restrictions. Many projects have anonymous teams, which makes it hard to verify sources.
Low market cap projects are easy to manipulate and the newly launched tokens from Pump.fun were the main targets of the major whales playing with prices.
Fake news can spread fast without being checked. Deepfakes make it worse by creating trust in something false. When people act quickly on false signals, markets become easy targets. That’s why crypto is often used as a playground for such schemes. In the current bull run, when Bitcoin is pulling up the prices, the crypto market becomes the main target of these price manipulators.
4 Stages of crypto pump and dump schemes
A typical pump-and-dump takes place in four clear stages. It often begins before the token is even available for trading. In the prelaunch phase, insiders quietly accumulate the token at a very low price. They might create a vague whitepaper or a flashy website, just enough to look legitimate. No real product or utility exists, only the promise of future value.
Next comes the launch, where promotional hype is built fast. Social media accounts, influencer posts, and even AI-generated videos help create the illusion of momentum. Claims of partnerships or breakthrough tech circulate without verification.
As the hype spreads, regular investors start buying. This is the third stage, the price pump. Sudden spikes in buying activity make it appear that the token is gaining real traction. Price charts look promising, which attracts more buyers hoping to catch the wave.
Finally, once the price reaches a high point, the orchestrators begin the sell-off. They dump their large holdings on the open market. With no real support underneath, the token crashes. New buyers are left with losses, and the original group walks away with the profit. The process often repeats under a new name, leaving no accountability.
A recent study found that one coin was targeted by pump-and-dump schemes 98 times in just four years. That’s nearly twice every single month.
How to avoid Pump and Dump schemes in Crypto?
You can protect yourself from pump-and-dump schemes by staying cautious and relying on verified information. Avoid taking investment advice from strangers on social platforms, especially when it appears without context or warning.
Scammers often use trending hashtags, celebrity images, or voice clones to build urgency and trust. Always double-check sources and avoid tokens that suddenly appear with bold claims but no clear development or team behind them.
Stay alert when you see promotions that promise fast, high returns. In crypto, real gains take time and involve risk. If something sounds too good to be true, it usually is. Before investing, study the project’s background, team transparency, and long-term goals.
Use trusted news sources, not viral content, to guide your decisions. Avoid pressure to act fast, and never buy just because others are doing it. Scammers rely on emotional reactions, not careful analysis. Protecting yourself starts with asking the right questions.