Report Shows $4.6B Spent on Pump and Dump Schemes in 2022

Following a rigorous investigation, Blockchain analytics firm Chainalysis disclosed that more than $4.6 billion was spent by crypto investors in 2022 buying pump-and-dump schemes tokens as per a report. 

8/ Read on to learn more about pump and dump schemes in the crypto world. https://t.co/gkhjKMSh40

— Chainalysis (@chainalysis) February 16, 2023

A close assessment of the report shows that approximately 10,000 tokens launched on BNB and Ethereum in 2022 were purposely created to dump on investors. 

The Feb. 16 report indicated that the BNB Chain and Ethereum blockchains took the lead among the platforms where the suspected tokens were launched.

It is noteworthy that a pump-and-dump scheme refers to circumstances in which the creators provided misleading statements, hype, and Fear Of Missing Out (FOMO) in a bid to persuade investors into purchasing tokens while secretly selling their stake in the scheme at pumped prices.

It was gathered that one of the most prolific purported pump-and-dump creators single-handedly launched 264 tokens last year. 

According to the report:

“Teams launching new projects and tokens can remain anonymous, which makes it possible for serial offenders to carry out multiple pump and dump schemes.”

Meanwhile, Chainalysis regarded a token as a pump and pump if it had a minimum of 10 swaps and four back-to-back days of trading on decentralized exchanges (DEXs) after barely a week of being launched. 

It was established that out of the 1.1 million new tokens that were launched last year, barely 40,500 tokens satisfied the criteria. 

More importantly, Chainalysis established that 445 individuals and groups were reportedly behind the suspected pump-and-dump tokens, which led to no fewer than $30 million in total profits. 

Like Pump and Dump, Crypto Scam Rages On

It is important to note that crypto scam has continued to occupy centrestage just like pump-and-dump surged in 2022. Blockchain security firm Peckshield reported that more than $3 billion was stolen from digital assets. 

Given the spate of pump and dump, platforms such as BNB Smart Chain and Ethereum blockchains should ensure that they scrutinize projects to be launched to identify and curtail malevolent elements. 

As SEC continues its clampdown on crypto projects, the crypto space should be sanitized and bad elements should be purged out by all means possible.