Educating oneself about the crypto ecosystem is vital for investors to follow during a bear market while expecting a bull cycle. That being said, having a good understanding of crypto investment involves keeping an eye out for fraudulent projects that threaten to drain assets overnight, a.k.a. pump-and-dump schemes.
Pump-and-dump in crypto is an arranged fraud that involves misleading investors into purchasing artificially inflated tokens — typically marketed and overrated by paying celebrities and social influencers.
SafeMoon token is one of the most prominent examples of pump-and-dump schemes, which includes Nick Carter, Soulja Boy, Lil Yachty, and YouTubers Jake Paul and Ben Phillips.
The people owning the biggest pile of tokens sell out, once the investors have purchased tokens at inflated prices, resulting in an immediate crash in the token’s prices. While impostors mask pump-and-dump schemes under the pretext of creating the next batch of crypto millionaires, well-informed investors have the upper hand in classifying and avoiding their involvement.
Pump-and-dump schemes are usually accompanied by false promises around three broad categories — solving real-world use cases, guaranteed exorbitant returns, and unwithered backing from celebrities and influencers.
In the next bill cycle, traditional and crypto investors across the globe will speak up about efforts to recoup losses from the ongoing bear market. Knowing this information, impostors will try and find prospects to dupe unwary investors by presenting unrealistic gains. As a result, do your own research (DYOR) stands as one of the best pieces of advice in crypto.
Elon Musk was recently accused of manipulating crypto prices by prominent South African billionaire businesswoman Magda Wierzycka who believes that Musk’s social media activity and its implications on the price of Bitcoin (BTC) should have made him the subject of an investigation by the U.S. Securities and Exchange Commission. She claimed that Musk knowingly pumped up the price of Bitcoin via tweets, including those mentioning Tesla’s $1.5 billion BTC purchase, then “sold a big part of his exposure at the peak.”
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