According to a new investigation from blockchain analysis firm Chainalysis, a significant percentage of all new crypto in 2022 was nothing more than an ordinary pump and dump. According to Chainalysis, about 1.1 million new cryptos were created last year, of which they say about 25% were scams.
Pump and dump
A ‘pump and dump’ is a classic form of scam within the crypto market. A project is praised by the team as the next best thing and many people will get on board because of the hype that has arisen. However, behind the scenes, the people involved in the project have long been stocking up on tokens on a large scale.
The moment the project gains traction and the price rises sharply, those involved dump all their tokens, which means that they walk away with a huge profit, but all the unlucky investors are left with empty pockets. As the name suggests, the price comes first pumped and then become again dumped.
Chainalysis states in their research that no less than 25% of all new crypto in 2022 was such a scam. In total, by 2022, some $30 million would have been stolen by scammers in this way during this period.
Large scale scam
In the period from January 2021 to March 31, 2022, Chainalysis tracked down at least 46,000 people who have fallen victim to pump and dumps. In addition, no less than $ 680 million was stolen from gullible investors and traders during this period.
The Chainalysis researchers revealed that the prevalence of pump and dumps is largely due to the ease with which malicious individuals can introduce new digital assets and set an artificially high price and market cap for them “on paper” by artificially inflating the initial trading volume. blowing and control the circulating supply.