Pump and dump: how the scam works and the warning signs

• The price really is rising, and a rising price is the most persuasive advertisement there is.
• The tip seems to come from many independent people at once. They are often the same few people, or accounts they control.
• There is a deadline: the announcement is tomorrow, the listing is on Friday, the window is closing.
• Some group members post screenshots of gains. Those who lost do not post.

• An unsolicited tip about a share or a token you had never heard of, with a promise of a large and quick rise.
• Something very cheap and little traded, with scant or unverifiable information about the business behind it.
• A sudden surge in price and trading with no news from an official source to explain it.
• A group with a countdown, a “signal time”, or instructions to buy at a set moment and “hold”.
• Promoters who do not say whether they hold the thing they are recommending.

One sign alone proves nothing, and a fraud may show none of them at first. The Check this offer list puts fourteen such questions side by side.

• A share or token bought in a pump and dump is still yours, at whatever it is now worth. Whether to keep or sell it is a decision this page cannot make for you. Reporting the promotion to the market regulator is separate from that decision.

1. 01Stop paying. Send nothing more, whatever the reason given: a tax, a fee, a deposit to “unlock” the account, a charge to recover what was lost. A further payment is the usual next step of the fraud.
2. 02Stop the conversation. There is no need to explain, argue or warn. Do not delete it, either: it is a record.
3. 03Keep records. Messages, names and numbers used, the addresses of websites, payment receipts, account and wallet details, screenshots of anything that might disappear. Note the dates.
4. 04Tell your bank or payment provider at once. Use a number you find yourself, on a card or a statement, not one from a message. Say it is fraud. Time matters, and they will say what they can and cannot do.
5. 05Report it to the authority in your country. That is usually the police or a national fraud-reporting service, and the financial regulator. A report helps others even where it does not help you.
6. 06Secure what was shared. Change passwords that were given out or reused, remove any remote-access software that was installed, and tell the provider of any account or card whose details were passed on.
7. 07Expect a second approach. People who have lost money are contacted again, by “recovery agents”, “lawyers” and “officials” who ask for a fee first. See the page on recovery-room fraud.
8. 08Tell someone you trust. These frauds are built by people who do it for a living, and they work on careful, intelligent people. Silence helps only the fraudster.

Nobody can promise that money lost to fraud will come back. Sometimes some of it does; often it does not. Anyone who guarantees a recovery, or asks to be paid first, is describing another fraud.

Regulators publish free warning lists and registers of authorised firms; this site lists several under Nice & Need: stay safe. To check an address that claims to be this site, use Verify a GIO4X link.

Is a pump and dump illegal?

In regulated securities markets, deliberately pushing a price up with false or misleading statements in order to sell is market manipulation, and is against the law in most countries. For crypto-assets the rules vary by country and are still changing. Being legal or illegal does not change how it ends for a late buyer.

Can I profit by getting in early on a pump?

The people who are early are the organisers, who bought before the first message was sent. By the time a tip reaches a stranger, the selling has usually begun. Knowingly taking part in a manipulation can also be an offence.

How is a “rug pull” different?

A rug pull is the version where the promoters also created the token. Instead of only selling their holding, they withdraw the funds that allowed it to be traded at all, or use a feature of its code that prevents others from selling. The promotion is the same; the exit is more complete.