Scammers Amassed $241 Million Via Pump-and-Dump Scheme, Says Analyst 

A recent report released by the analytics platform Chainalysis unveiled that more than half of the ERC20 tokens introduced on Ethereum in 2023 resembled a possible pump-and-dump scheme.

Drawing insights from the report, Ki Young Ju, the founder and CEO of CryptoQuant, highlighted that the scammers have amassed $241 million through the pump-and-dump scheme with 90,408 tokens.

Generally, the pump-and-dump scheme is malpractice where a malicious actor strongly advocates for the surge of crypto in which they have invested and “dump” the tokens later at an inflated price.

According to the US Securities and Exchange Commission (SEC), the pump-and-dump scheme is a manipulation. As they wrote,

“In a pump and dump scheme, fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls, and investors lose money.”

As a means to analyze the market manipulation, the analyst verified the tokens that were traded at least five times on DEXs, indicating that the token has gained traction.

Further, the whale removed more than 70% of the token’s liquidity, leaving less than $300 in the token’s DEX liquidity pool, showing that the market collapsed.

The Chainalysis report also revealed that more than 370,000 tokens were launched on Ethereum, out of which around 168,600 were accessible for trading on decentralized exchanges (DEX).

After a detailed scrutiny of the tokens, Chainalysis identified that 54% of the tokens on DEXs met the criteria, suggesting a potential pump-and-dump scheme.