Pump and dump schemes are pretty easy to spot, as pump and dump group leaders usually advertise them as “trading signal groups“, or sometimes even straight-off shamelessly advertise them as “pump groups”.
The scheme is pretty straightforward: The group leader asks his/her members to buy a certain coin/token that is quite low in market cap to make the price far easier to manipulate, claiming that it will rise or “pump” in price.
The thing is, before the group leader announces which coin/token to buy, the leader already bought a significant amount of that certain coin/token, so the leader can sell them at a significantly higher price. The price of that coin/token does then increase because of the group members buying loads of the specific coin/token, while the leader is selling at higher prices; earning the group leader significant amounts of profit, sometimes even as high as 10x.
How the scam works
-You see a “trading signals” group being advertised on social media or on some forums.
-You join the group, mostly being on Telegram.
-The group owner buys an amount of a certain cryptocurrency and tells the whole group to buy it. Claiming that it will rise in price.
-The price does increase due to the people in the group buying the coin.
-At some point, the group owner sells or “dumps” everything, making huge amounts of profit while immediately dropping the price.
How to protect yourself
-Don’t join pump and dump groups masquerading as “trading groups”.
-Do your own research