Crypto Terms: Letter P

What is Pump and Dump (P&D) Scheme?

Pump and Dump (P&D) Scheme MEANING:
Pump and Dump (P&D) Scheme - a type of deception in which false and misleading positive statements are used to artificially inflate the price of a cryptocurrency.
1 minute

Let's find out Pump and Dump (P&D) Scheme meaning, definition in crypto, what is Pump and Dump (P&D) Scheme, and all other detailed facts.

The Pump and Dump (P&D) scheme is a type of fraud when the price of a cryptocurrency is artificially inflated using false and misleading positive statements.

How do P&D crypto schemes work? A group of coordinated cryptocurrency traders targets a certain coin with the goal of artificially boosting demand for the coin. Pump and dumpers target not only a single coin, but also a specific exchange. 

Their goal is to increase the volume of the coin in question, and they usually go after coins with low volumes. As the price of the targeted coin rises, many traders who aren't familiar with it typically fall for it, pushing up its demand and price. 

This coordinated move is frequently repeated in the reverse direction later, with the organizers exiting the market after a certain price goal is accomplished. Usually, this results in a sharp decline in the price of the coin, which leads to significant losses for traders who were uninformed of the scam and purchased the currency based on unreasonable and false expectations.

Traders that participate in P&D schemes usually use communication platforms like Discord and Telegram to coordinate their actions. P&D scheme organizers are typically the ones who stand to earn the most at the expense of traders who bought into their lies.

According to the research from crypto data firm Chainalysis, in 2021 P&D schemes took in more than $2,8 billion worth of crypto.