They are common in traditional finance, since scammers often promote assets in which they own shares among other investors, which makes the price go up quickly. When it reaches a certain point, sell the overvalued stock at a profit, causing the price to plummet.
The cryptographic tokens, tradable digital assets built on the blockchain of another cryptocurrency, are becoming increasingly popular with the same scammers. This is largely due to the relative ease with which teams can launch new projects and tokens remaining anonymous and setting an artificially high price and market cap “on paper”, seeding initial trade volume and controlling the supply in circulation.
Blockchain analytics firm examined all 1.1 million tokens released last year on the blockchain Ethereum and BNB. Virtually none of them registered activity after their launch.
Of the 40,521 tokens that gained traction, 9,902 (24%) suffered a 90% price drop in the first week after launch., marking them as pump and dump scams. “The most prolific suspected pump and dump token creator we have identified released 264 suspect tokens last year,” Chainalysis warns.
The report details that the buyers, not associated with the creators of the tokens, they spent a total of 4.6 billion dollars in cryptocurrency by acquiring some of the 9,902 suspected pump-and-dump tokens, orA relatively low amount compared to the trillions in crypto transaction volume in 2022but even so, spelling damage to unsuspecting investors “we estimate that the creators of these tokens got a total of 30 million dollars in profits from the sale of their holdings before the value of the tokens plummeted,” the report concludes.
Source: Ambito
