Topic
What is a crypto pump and dump?
Last reviewed:
- Quick fact 1
In a pump and dump, promoters hype an asset to push the price up, then sell their own holdings.
- Quick fact 2
When they sell, the price often falls fast and late buyers lose money.
- Quick fact 3
Scammers use social media and group chats to spread urgent crypto tips.
The short lesson
A pump and dump is an old trick in a new costume. A group buys a small, thinly traded asset cheaply. Then they hype it: posts, group chats, “insider” tips, paid promoters. New buyers rush in and the price jumps. That is the pump.
Then the group sells into the rush. The price falls, often fast. That is the dump. The people who bought late are left holding the loss.
Small crypto tokens make this easy, because a little money can move the price a lot, and anyone can create a token.
Signs of a pump:
- Hurry. “Buy before it’s too late,” “going to 100x,” a countdown.
- A group or channel that tells everyone to buy at the same time.
- Paid promotion that does not say it is paid.
- No clear reason for the price move except the hype itself.
We teach this so you can recognize it, not so you can trade it. We do not pick coins, and we do not call tops or bottoms.
Related terms
Go deeper in Lesson 9: What hurry and secrets look like
Common questions
Are pump and dumps illegal?
Market manipulation can be illegal. The rules depend on the asset and where it happens. Either way, late buyers usually lose.
How is a pump and dump different from a rug pull?
In a rug pull, the creators take the money and abandon the project. In a pump and dump, promoters sell into hype. Both leave late buyers with losses.
What should I do if a group tells me to buy now?
Slow down. Urgency is the tool. Leave the group if it pressures you.
Where can I report one?
In the US, you can report to the SEC at sec.gov/tcr, or to the FTC at ReportFraud.ftc.gov.