The Truth about Pumping and Dumping in Crypto Markets

Gaming the crypto marketplace

We cant stop hearing about crypto right now.

In 2017 the whole market grew a huge amount. This made many people weathly. Also by self-selecting bias the people who gained the most were generally computer savvy and have strong technical backgrounds.

However, this kind of financial success attracts people who game the system. Recently I've stumbled upon a Discord chat that coordinates pump and dumps in crypto markets...

Pumping and dumping is illegal in securities markets - and it's unclear the legality in the crypto world. This chatroom is open to the public and you can join the conversation here: https://discord.gg/Z6XmYMt

I do not condone using this information, and this article is not to promote any investment advice. Always contact a trained professional investment advisor before taking any investment advice.

What is a pump and dump?

Basically, a pump and dump is a two-part financial scheme. Where bad actors artificially inflate or pump a market and then sell or dump near the peak. This market will then fall quickly since it was inflated way above its actual intrinsic value.

After finding this chat I was curious how effective this operation was. I quickly found the info on their last pump and dump - A few days earlier.

Here are my findings

We can see here that the bot states that a KMD pump will happen on Binance at 11AM

The spike is very clear, and we can see the pump working on this exchange (Binance). However, it seems like a lot of the buying pressure is coming before the bots notification. Suggesting that the pumping originators are selling right after they announce the pump and dump.

Likely there are few people are making a lot of money and taking it from the many other pumping participants. It is amazing how easy it is to find these groups on Telegram or Discord.

We will see how these groups affect the market, what regualtions will come about to hinder these groups and bad actors.

What impact do you think this will have on the crypto markets?

images sourced from screenshots and google