Pump and dump scheme

A pump-and-dump is a deliberate market manipulation where bad actors create hype around a low-value token to drive price up and then sell their holdings to cash out while late buyers are left with worthless tokens. The scheme usually unfolds in four stages: pre-launch, launch, pump and dump. In pre-launch the scammers build exclusivity with allowlists and presales to seed early buyers. At launch they amplify buzz through shills and coordinated posts on social platforms to trigger FOMO. During the pump the price rises as more uninformed buyers pile in. At dump the insiders sell at once and liquidity vanishes, collapsing the price and trapping retail holders. Watch for clear red flags before you invest. Check token allocation and refuse projects that give most supply to one wallet or to anonymous insiders. Inspect vesting schedules and be wary when founders can unlock large amounts at will. Use on-chain tools to see who holds the tokens and to follow transfers that add or remove liquidity from pools. Read the smart contract to find minting functions and owner privileges that allow unilateral changes. Look for audits and read them, but do not assume an audit is a guarantee. Monitor social channels for disabled comments, fake engagement, bots and a flood of repetitive messages. High follower counts with low meaningful interaction usually mean paid or fake promotion. On price charts watch sudden volume spikes with shallow order books and big price moves on tiny liquidity. Those are the hallmarks of manufactured pumps. Protect yourself with simple practices. Use data and logic, not emotion, when deciding. Do basic due diligence: review tokenomics, check founders’ track records, verify liquidity locks, and confirm the contract on a block explorer. Make small test buys before committing significant capital and set clear exit rules to limit losses. Store your assets in secure custody and use hardware wallets and reputable portfolio tools to keep control of keys and to verify transactions on trusted displays. Remember that pump-and-dump schemes have roots in old markets but they exploit crypto’s speed and anonymity. Laws may forbid this behavior in regulated markets, yet enforcement is uneven in crypto. Treat every guarantee of quick riches as suspect, learn from each market collapse, and let the price of pain teach you to seek truth and to invest with cold logic rather than heated desire.