Cryptocurrency investors funneled as much as $4.6 billion into crypto tokens suspected to be part of \u201cpump and dump\u201d schemes in 2022.<\/p>\n
A Feb. 16 report<\/a> from blockchain analytics firm Chainalysis \u201canalyzed all tokens launched\u201d in 2022 on the BNB Smart Chain and Ethereum blockchains and found thatover 9,900 bore characteristics of a \u201cpump and dump\u201d scheme.<\/p>\n A pump-and-dump scheme<\/a> typically involves the creators orchestrating a campaign of misleading statements, hype, and Fear Of Missing Out (FOMO) to persuade investors into purchasing tokens while secretly selling their stake in the scheme at inflated prices.<\/p>\n Chainalysis estimated investors spent $4.6 billion worth of crypto buying the nearly more than 9,900 different suspected fraudulent tokens<\/a> it identified.<\/p>\n The most prolific purported pump and dump creator Chainalysis identified \u2014 who was not named \u2014 is suspected of single-handedly launching 264 such tokens last year, with the firm explaining:<\/p>\n \u201cTeams launching new projects and tokens can remain anonymous, which makes it possible for serial offenders to carry out multiple pump and dump schemes.\u201d<\/p><\/blockquote>\n Chainalysis classified a token as being \u201cworth analyzing\u201d as a potential “pump and dump” if it had a minimum of 10 swaps and four back-to-back days of trading on decentralized exchanges (DEXs) in the week after its launch. Of the 1.1 million new tokens launched last year, only over 40,500 fit the criteria.<\/p>\n If a token from this group saw a price decline in the first week of 90% or greater, Chainalysis deemed it likely the token was a \u201cpump and dump.\u201d The firm found that 24% of the 40,500 tokens analyzed fit the secondary criterion.<\/p>\n Chainalysis estimated that just 445 individuals or groups are behind the suspected pump-and-dump tokens \u2014 suggesting that creators often launch multiple projects \u2014 and says they made $30 million in total profits from selling their holdings.<\/p>\n Related: <\/em><\/strong>Navigating the world of crypto: Tips for avoiding scams<\/em><\/strong><\/a><\/p>\n \u201cIt\u2019s possible, of course, that in some cases, teams involved with token launches did their best to form a healthy offering, and the subsequent drop in price was simply due to market forces,\u201d the firm added.<\/p>\n Despite the concerning statistics, in a separate report, the firm noted revenues from crypto scams\u00a0were cut almost half in 2022<\/a> largely due to depressed crypto prices.<\/p>\n<\/div>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-02\/23ef90df-e2fa-4eb9-b2a5-418e6aa33999.png\" "\\"\\"")