What is Pump & Dump


Pump & Dump (P&D) is a long-standing market fraud that also exists in traditional financial markets. Simply put, scammers artificially inflate the price of stocks they own through false and misleading positive statements, or we can say "shilling," in order to sell previously cheaply purchased stocks at a higher price. Once the scammers start selling, the losses from the price drop caused by the heavy selling pressure are borne by other investors. Pumpers could be the project's insiders or other speculators in the market.

It should be noted that the price increase mentioned here is divorced from the actual supply and demand relationship in the trading market, and it is not brought about by the internal value growth of the underlying asset—the price increase here is purely artificial. This type of trap is popular in micro-caps.

The Internet now provides many facilities for scammers, who can reach and incite a large number of potential investors through multiple channels such as social media platforms, spam emails, online advertisements, etc.


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