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Nearly a Quarter of New Cryptos Last Year May Have Been Frauds, Analysis Finds

Pump and dump schemes are common in crypto, where token prices can crash in a flash.

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Almost a quarter of new cryptocurrencies launched in 2022 exhibited characteristics of “pump and dumps”—a form of fraud—according to new analysis from blockchain intelligence group Chainalysis.

Pump and dump tactics have a long history in the stock market, where they are a form of securities fraud. Investors who hold a stock promote it to pump the price, and then dump it at inflated levels on unsuspecting investors who buy in on the hype before it all comes crashing down.

“Pump and dump schemes have also become common in the crypto world,” analysts from Chainalysis wrote in a report published Thursday. It should come as little surprise to watchers of crypto markets, where huge spikes based on rumors and hype can quickly evaporate.

“This is largely due to the relative ease with which bad actors can launch a new token and establish an artificially high price and market capitalization for it ‘on paper’ by seeding the initial trade volume and controlling the circulating supply,” the Chainalysis analysts added. They noted that the world of crypto allows people launching projects to remain anonymous, which can facilitate serial offenders carrying out these schemes.

There were more than 1.1 million tokens launched last year, according to Chainalysis. The vast majority went nowhere, with less than 41,000 categorized as having an impact on the crypto ecosystem, based on exchange activity. Of the tokens that meet that definition, almost 10,000, or 24%, saw a price decline of 90% or more in the first week of trading, “indicative of possible pump and dump,” the analysts said. 

It’s true—these tokens could have just fallen flat as junk. But the fact that they had an impact on the crypto ecosystem, as per Chainalysis’s definition, suggests that there could have been real momentum behind prices going up—if major holders didn’t sell.

Based on the Chainalysis research, unsuspecting buyers spent some $4.6 billion worth of crypto acquiring the tokens in the highlighted pump and dump schemes, while creators of tokens who dumped made a total of $30 million. One prolific suspected person who pumped-and-dumped was behind 264 such likely frauds, Chainalysis said.

This latest research on crypto schemes does little to inspire confidence in an industry that itself has been rocked by multiple high-profile fraud charges this year, including alleged schemes involving crypto exchange FTX and lender Celsius.

More than 50% of voters who hold crypto want action and protection from fraudulent scams, according to a national poll conducted late last year by the Washington, D.C.-based Crypto Council for Innovation.

“Congress is a critical component to ensuring consistency and clarity in the digital future,” Cory Gardner, the chief strategist of political affairs at the group, said in a statement after the poll’s release. Gardner is a former Congressman, having served Colorado as a Republican in both the House of Representatives and Senate.

The world of crypto faces existential threats on multiple fronts—including gathering storm clouds amid U.S. regulatory scrutiny—but investor confidence is key among them. If ordinary retail investors can’t gain confidence in crypto as a stable and legitimate asset class—like stocks or bonds or real estate—the cryptocurrency industry will have trouble rebounding from its current travails.

“Many believe that cryptocurrency is approaching an inflection point that could spark mass adoption, but that could be difficult if the general public perceives cryptocurrency as rife with pump and dump schemes designed to prey on newcomers,” the Chainalysis analysts said.

Write to Jack Denton at


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