
What Are Pump and Dump Schemes in Crypto? (And How to Avoid Getting Burned)
New token launches in crypto often come with hype, influencers, and promises of 10x gains. But beneath the buzz, there’s a dark side: pump and dump schemes.
These aren’t just market volatility they’re coordinated scams designed to lure in unsuspecting retail traders and leave them holding the bag.
Here’s how they work, how to spot them, and how Ouinex helps you avoid them entirely.
Please note: This article does not constitute investment advice. Laws governing crypto, derivatives, and other forms of trading and investments as well as taxation vary by region and are subject to change. You are responsible for complying with the laws in your jurisdiction. Ouinex’s services and offers, including those mentioned in this article if any may vary by location and are subject to change. All investments carry risk.
Key Takeaways
- Pump and dump schemes are common around new token launches in crypto
- Initial investors “pump” the price by promoting it
- When retail traders buy into the idea of the token being the next big thing and start buying, the price goes up
- Once the price is up, all the initial investors sell off the token, leading to the price dropping drastically sometimes leaving retail traders with a worthless token
- Red flags include anonymous teams, unrealistic hype, and sketchy exchanges
- Ouinex uses strict token vetting to prevent pump-and-dump listings
What Is a Pump and Dump in Crypto?
A pump and dump is a market manipulation scheme where the price of a token is artificially inflated (“pumped”) through hype, misleading information, or insider buying only for the insiders to quickly sell (“dump”) once the price peaks.
The result? Retail traders buy in at the top, and the token price collapses right after. Most end up with massive losses some tokens even become pretty much worthless.
How Pump and Dump Schemes Work
- A new token launches, often on a lesser-known or unregulated exchange (but not always).
- Insiders (the exchange, token creators, investors like big financial institutions) buy up a bunch of the token.
- Promoters create buzz: social media posts, influencer endorsements, Telegram or Discord hype.
- The price skyrockets on low volume, often manipulated.
- Retail traders rush in, afraid of missing out (FOMO) and the price goes up as they start buying.
- Insiders and early holders sell off their positions at the top.
- The price crashes. The project goes silent. Everyone else is left with worthless tokens.
This happens a lot especially on exchanges that list tokens without proper vetting, or even get in on the scams.
Red Flags for Pump and Dump Tokens
If you’re wondering whether a token is part of a scammy new launch, look out for:
- Unverified or anonymous teams
- No real product or roadmap
- Sudden, extreme price spikes with little trading volume
- Hype-driven marketing with no technical backing
- Promoters using phrases like "next 100x gem" or "don’t miss out"
- Listing on obscure exchanges that allow low-quality tokens
Pump and dumps are legal grey areas, but they’re financial traps and they prey on new traders.
Tokens Rumored to Have Been Pumped and Dumped
Getting definitive proof of pump and dump schemes is sometimes difficult due to the nature of the schemes. However, here are some tokens that were rumored to have been pumped and dumped:
1. SafeMoon (SAFEMOON)
Exchanges: PancakeSwap, SafeMoon Swap
Promoted heavily in early 2021. Allegations of pump-and-dump behavior and lawsuits followed after its price collapsed.
2. Save the Kids (KIDS)
Exchanges: PancakeSwap
Promoted by influencers from FaZe Clan. Accused of being a pump-and-dump after insiders allegedly dumped tokens post-launch.
3. CxCoin
Exchanges: Unspecified DEXs
Launched by streamer Ice Poseidon. He later admitted to withdrawing significant funds, leading to scam accusations.
4. $Libra
Exchanges: Unspecified
Promoted by Argentine President Javier Milei. Accused of being a rug pull and pump-and-dump following a sharp crash in price.
5. Bitconnect (BCC)
Exchanges: Bitconnect’s own platform
Notorious Ponzi scheme that saw its token crash from over $500 to near zero.
6. PlusToken
Exchanges: Unspecified
Ran as a Ponzi scheme under the guise of a high-yield wallet. Collapsed after billions were stolen.
7. NexFundAI
Exchanges: N/A (Fake token created by the FBI)
Used in a sting operation to bust crypto pump-and-dump scams.
8. SLS Coin
Exchanges: Bittrex
Pumped on Telegram and other platforms. Price surged by 950% before crashing.
9. $Trump Coin
Exchanges: Binance
A meme coin that surged on hype and fell rapidly, raising manipulation concerns.
10. CYBER Token
Exchanges: Upbit, Binance
Spiked massively due to coordinated activity on Upbit, then quickly corrected.
Please do your own research to find out about tokens that are rumored to have been pumped and dumped.
How Ouinex Works to Prevent Pump and Dump Schemes
We want to be a fair and transparent crypto and derivatives trading platform. That wouldn’t be the case if we allowed people to pump and dump their tokens on here. So what do we do to protect you from pump and dump schemes?
Well, we vet each new token we list. That means looking into the investment structure and launch strategy.
In addition, our own token, $OUIX, was pre-sold to retail traders only. No institutions. Plus, we’ve added impressive vesting and cliff periods. Meaning that once the token is launched, these early buyers cannot sell off their tokens right away. And on top of that, a lot of them have agreed to stake their tokens.
In short: if you see a new token launch on Ouinex, you can be confident it’s been vetted and is free of pump-and-dump risk.
FAQs: Pump and Dump Schemes in Crypto
What is a pump and dump?
It’s a scheme where a token’s price is inflated by artificial hype, then dumped by early holders once retail traders buy in. Basically, the early buyers “pump” the price (together with their friends the influencers) and then, as retail traders start buying and the price goes up, they “dump” it (sell it off). As a result, the retail traders are left with a token worth very little.
Why are pump and dumps so common in crypto?
Because many exchanges list tokens without vetting them, and the market is largely unregulated.
Can new token launches be trusted?
Some can but always research the team, technology, and exchange behind the launch. On Ouinex, every token is vetted.
How does Ouinex prevent pump and dumps?
We have a no-pump-and-dump policy, strict listing requirements, and conduct thorough due diligence on all tokens before launch.
What should I do if I suspect a token is being pumped?
Avoid buying in. Look for signs of artificial hype and sudden volume. And use trusted, transparent platforms like Ouinex.