On December 18, the analysts of Social Science Research Network (SSRN) published the research about a pervasive tactic known to crypto market – pump and dump schemes.
The paper quantifies the scope of cryptocurrency pump and dump on Discord and Telegram, two widely popular group messaging platforms with 130 million users and 200 million users respectively.
According to the research, both platforms are the most popular outlets for pump and dump schemes involving cryptocurrencies. The analysts identified 3,767 different pump signals advertised on Telegram and another 1,051 different pump signals advertised on Discord during a six-month period in 2018. The schemes promoted more than 300 cryptocurrencies.
“This comprehensive data provides the first measure of the scope of pump and dump schemes across cryptocurrencies and suggest that this phenomenon is widespread and often quite profitable. This should raise concerns among regulators,” – reads the paper.
Analysts also found that the coin’s rank (market capitalization/volume) is the most important factor in determining the profitability of the pump: pumping obscure coins (with low volume) is much more profitable than pumping the dominant coins in the ecosystem.
If you want to know how to avoid pump and dumps, fake ICOs and Telegram schemers, you can read our article about it: How to avoid pump and dump schemes.
