In 2022, many crypto investors saw their hard-earned money go up in smoke with the demise of crypto companies such as Celsius, Voyager and FTX. However, it is often underestimated how much money was lost as a result of scam coins. Earlier you could read in the altcoin news that in total even more money was lost as a result of scams than with the collapse of all crypto companies in 2022.
According to a report Blockchain analytics company Chainanalysis launched a total of 9,900 tokens on the BNB Chain (BNB) and Ethereum (ETH) network in the past year with the characteristics of a pump and dump project.
What is pump and dump?
With a pump and dump, false or misleading information is used to try to increase the value of a certain cryptocurrency in a short period of time. There is a lot of hype and Fear Of Missing Out (FOMO) created to convince investors to buy tokens. The responsible party has already bought a very large share of the coin in question before creating the hype and sells it at the highest point. As a direct result, the price falls very hard and the masses are left with significant losses.
Nearly 10,000 crypto scams
Chainanalysis estimated that investors would have spent $4.6 billion to buy the nearly ten thousand different fraudulent tokens it identified.
Chainanalysis itself managed to identify one person suspected of single-handedly launching 264 such tokens last year. The report stated the following:
“Teams launching new projects and tokens can remain anonymous allowing serial offenders to run multiple pump and dump schemes.”
It is important to mention that the blockchain analytics company considers a coin to be pump and dump if it is down 90% or more in the first week. In total, more than 1.1 million tokens were launched on the BNB Chain and Ethereum last year.
Chainanalysis classified a token as “worth analyzing” as a potential pump and dump if it had a minimum of 10 swaps and four consecutive trading days on decentralized exchanges (DEXs) in the week after launch. Of the 1.1 million, only 40,521 met the criteria.
