When it comes to Bitcoin, there is a lot of talk about pump and dump schemes. But what are they? And how do they work?
A pump and dump scheme is when a group of people buy a cryptocurrency, artificially inflating the price, and then sell it off at the higher price. The people who are left holding the bag are the ones who didn’t sell in time and are now stuck with a currency that is worth less than what they paid for it.
These schemes are often orchestrated by groUPS of people on Telegram or other messaging apps. They will coordinate their buying so that they can all sell at the same time and maximize their profits.
Pump and dump schemes are illegal in many jurisdictions because they are considered fraud. The people behind them can be subject to civil and criminal penalties.
If you’re thinking about buying into a cryptocurrency, be sure to do your research first. There have been many instances of pump and dump schemes in the past, and there’s no guarantee that you won’t be the one left holding the bag.