Pump & Dump is a form of financial fraud that involves the artificial inflation of the price of a stock or other security through false and misleading positive statements. It is typically accomplished by promoting the security through false or misleading statements in order to create a buying frenzy that will drive up the price. Once the price has been driven up, the perpetrators of the scheme will then sell their own holdings at an artificially inflated price, resulting in a large financial gain.
On the night of November 5, 2019, the price of the ParallelCoin token increased thousands of times in a matter of hours (from $1.60 to more than $2200), which gave users the opportunity to talk about the emergence of a “new bitcoin”. A few hours later, the price returned to the $2 level.
Ladies & gentlemen.. we have the new Bitcoin 😂
But seriously. Does anybody know what ParallelCoin is?$DUO pic.twitter.com/AX1Owa41hw
— Crypto Godfather 教父 (@CryptoGodfatha) November 5, 2019
The increase in the price of the LINK token was preceded by messages on Twitter about cooperation: on June 13, 2019, Chainlink announced a partnership with Google Cloud, which confirmed this information. After that, the price of the LINK token rose from $1.19 to $1.93.
On June 26, Chainlink announced that it had listed the token on Coinbase, after the price of the token rose to $2.24. On June 28, the pump began: several addresses bought large amounts of LINK on Binance, after which they transferred them through a series of fake addresses. By June 29, the price of LINK had risen to $4.45. According to observers, ChainLink’s daily trading volumes on the Binance exchange at the end of June were artificially inflated. Thus, with a capitalization of only $1.4 billion, this figure amounted to $863 million. The price movement chart for the mentioned period, according to some, looked unnatural, especially considering that volumes in favor of sales were recorded on one of the green candles. There was a possibility that the unknown wanted to provoke FOMO, but failed to achieve their goal.
On July 2, the dump phase began: addresses that had previously bought tokens began to dump them, having previously passed them through a chain of fake addresses. Only one of the addresses from July 2 to July 15 sold 4.2 million LINK tokens. On the first day of the dump, July 2, the price of the token dropped to $3.73.
On July 6, the project’s Twitter page posted a recruitment message that some observers believe was indicative of a dump. Following this post, a chart was circulated on social media showing estimated sales of 700,000 LINK tokens on each bounce in price after peaking at the end of June. After passing through a small chain of addresses, these tokens were traded on Binance. Some believed that the announcement of the state expansion was just an attempt to cover up a large-scale liquidation of tokens.
By July 15, LINK was already worth $2.79, after which the collapse continued. As of September 16, LINK was worth $1.61: the price has almost returned to the level of mid-June.
On February 6, 2018, in a few hours, the price of the little-known E-Coin (ECN) token rose from $6 to $290 – by 4700%. The capitalization of the cryptocurrency reached $1.5 billion. The token entered the top 20 on CoinMarketCap. After that, during the day, the price fell six times – to $45.
Then there was a new round of ECN growth to $228 (400%). The subsequent dump lowered the cost to $5. The next day, the price rose again from $5 to $65 (1200%). At the time of these events, the project did not even have a working website.
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Pump & Dump is a form of market manipulation where investors buy up a large amount of a particular stock in order to artificially inflate its price. Once the stock reaches a certain price, the original investors will then sell all their shares, leaving the remaining investors with a devalued stock. Pump & Dump schemes, while illegal, still occur on a regular basis, making it important for investors to be aware of the risks associated with these types of investments.
What is Pump & Dump?
Pump and dump is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money.