Crypto was meant to create financial opportunities, but for many, it has become a trap filled with scams, such as pump-and-dump schemes.
These aren’t the old-school schemes anymore. Scammers now use deepfake videos, fake news, and viral social media hype to trick investors into buying worthless tokens. The price soars, they cash out, and everyone else has nothing.
To avoid losing money, it is primary to be aware of how these scams operate and what to be cautious about, so this is what you need to know.
A pump-and-dump scam is fundamentally about artificial hype. The scammers invent or market the low-value asset, normally a new token that has absolutely no utility and saturates the market with hype. This could include phony endorsements, inflated promises, or apparent community endorsement. As more people invest, the price of the asset rises sharply (the "pump").
Then, at the peak of public interest, the original promoters sell off their holdings (the "dump"), causing the price to crash. Those who bought in late are left holding worthless tokens, while the scammers walk away with profits.
Although this is not a new strategy, with its speed and relatively unregulated environment, cryptocurrency is a much newer and easier strategy today and much more difficult to put out.
What makes the new wave of pump-and-dump schemes more dangerous than ever is how convincing they’ve become. Nowadays, scammers use deepfake videos to pretend to be respected public individuals and create the illusion that a famous personality or tech luminary is endorsing the token. Such videos appear nauseatingly realistic, and they go viral across social media.
Complemented with fake press releases and AI-generated articles that seemingly originate from legitimate news organizations, the mirage of authenticity becomes almost impervious. Add some viral tweets, paid influencer promotion, and manic Telegram communities, and what you end up with is a precisely-engineered hype engine.
Once enough people buy in, prices spike, and that's when the orchestrators exit, selling off their stash and leaving the token to crash. Investors are left confused and empty-handed.
This kind of scam thrives in crypto for several reasons:
Although it may simply seem like another Internet scam, the consequences on human individuals are disastrous. Most of the victims are new investors who are attracted by a golden opportunity. Others gamble with their savings or with loans at hand and lose in a few hours.
There is even a more disturbing scenario when scammers issue tokens based on a real-world disaster or a societal campaign, and interest is pumped grotesquely based on the emotional appeal. When these tokens eventually come crashing down, it is not merely a financial loss, but a loss that is also personal as well as emotional.
Younger investors, especially those influenced by popular content on TikTok, Reddit, or X (former Twitter), are at special risk. They tend to shoot themselves before even knowing that it is a trap, and this is caused by a lack of experience and also the availability of quick wins.
The best way to avoid falling victim to these schemes is to stay informed and cautious. Here’s what to watch for:
In case some token is promoted by celebrities or in the news, take time to verify that it is real. Find information on official remarks rather than viral videos or screenshots.
Scammers push urgency to prevent rational thinking. If something feels rushed, take a step back.
Check the project’s website, team, and roadmap. If it lacks transparency or real utility, it’s a red flag.
If the Telegram or Discord group is aggressively pushing buys and discouraging questions, that’s a bad sign.
Never invest more than you can afford to lose. Crypto is volatile, and the risk is even greater when scams are involved.