Scammers Amassed $241 Million By way of Pump-and-Dump Scheme, Says Analyst 

• Chainalysis experiences that 54% of Ethereum tokens in 2023 resembled a pump-and-dump scheme.
• The report states that the scammers have amassed $241 million via market manipulation.
• The platform analyzed the tokens traded greater than 5 instances on DEXs to establish the manipulation.

A latest report launched by the analytics platform Chainalysis unveiled that greater than half of the ERC20 tokens launched on Ethereum in 2023 resembled a potential pump-and-dump scheme. 

Drawing insights from the report, Ki Younger Ju, the founder and CEO of CryptoQuant, highlighted that the scammers have amassed $241 million via the pump-and-dump scheme with 90,408 tokens.

Typically, the pump-and-dump scheme is malpractice the place a malicious actor strongly advocates for the surge of crypto during which they’ve invested and “dump” the tokens later at an inflated value. 

In keeping with the US Securities and Trade Fee (SEC), the pump-and-dump scheme is a manipulation. As they wrote,

“In a pump and dump scheme, fraudsters sometimes unfold false or deceptive info to create a shopping for frenzy that can “pump” up the value of a inventory after which “dump” shares of the inventory by promoting their very own shares on the inflated value. As soon as the fraudsters dump their shares and cease hyping the inventory, the inventory value sometimes falls, and buyers lose cash.”

As a method to research the market manipulation, the analyst verified the tokens that had been traded a minimum of 5 instances on DEXs, indicating that the token has gained traction. 

Additional, the whale eliminated greater than 70% of the token’s liquidity, leaving lower than $300 within the token’s DEX liquidity pool, exhibiting that the market collapsed. 

The Chainalysis report additionally revealed that greater than 370,000 tokens had been launched on Ethereum, out of which round 168,600 had been accessible for buying and selling on decentralized exchanges (DEX). 

After an in depth scrutiny of the tokens, Chainalysis recognized that 54% of the tokens on DEXs met the factors, suggesting a possible pump-and-dump scheme.