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The academic literature on cryptocurrency (crypto) P&D schemes is scarce (for an exception, see the recent working paper of Li, Shin, & Wang, 2018).
Thus, this paper will give an overview of what is currently known about the topic
from blogs and news sites. To provide a theoretical angle, economic literature
related to the topic is examined, and this information synthesised with
cryptocurrencies by highlighting the similarities and potential differences.
The overarching aim of this paper is to spark academic interest in the topic and to introduce P&Ds as an emerging problem.
First, absent a body of academic research on cryptocurrency pump-and-dump schemes, we provided an initial working formalisation of crypto
P&Ds identifying criteria that might help in locating and ideally preventing
this emerging fraud problem. The approach, data,
and crypto signals for
Binance findings of this paper might form a basis for further research
into this emerging fraud problem and could ultimately inform
crime prevention.
A pump-and-dump scheme is a type of fraud in which the offenders accumulate a commodity over a period, then artificially inflate
the price through means of spreading misinformation (pumping), before selling off what
they bought to unsuspecting buyers at the higher price (dumping).
During the pumping phase, users are often encouraged to spread misinformation about
the coin, in an attempt to trick others into buying it, allowing them to
sell easier. The goal was to artificially raise the price of the
stock, and then sell it off to misinformed buyers who were led to believe that they were buying a promising commodity.
Indeed, if they are too slow, they may end up buying at the peak and be unable to sell for a
profit. The ‘hype’ around buying the coin once the pump is announced
is due to the short timescale of these schemes: Martineau (2018) reported on two pumps that
reached their peaks within 5-10 min.
The pump-and-dump procedure usually consists of the group
leaders declaring that a pump will take place at a particular time on a particular
exchange, Crypto signals
for Binance and only after the specified time will the coin be announced (see Fig.
2). After the coin is announced members of the group chat try to be amongst the first to buy the coin, in order to
secure more profits. Cryptocurrencies are a digital medium of exchange, and they usually rely on cryptography instead of a central institution to prevent problems like counterfeiting.
It has a P2P exchange, spot, and futures. This is where Binance Futures Signals come in, as it provides daily signals to help
you know when to enter or enter the market. Right: Corresponding exchange data (Binance) of the targeted coin (Yoyo) showing
the effect of the pump. The accumulation phase
usually occurs incrementally over a more extended period of time, in order to avoid raising the
price before the pump.
Group leaders can also guarantee profits by offering access to the pump notification at an earlier stage prior to the group-wide announcement,
in exchange for payment. The goal is to propose some defining criteria for what a Crypto signals for crypto
signals for Binance Binance - https://cryptopumpsignals.info/, P&D is and to
subsequently use this information to detect points in exchange data that match these criteria, crypto
signals for binance forming a foundation for further research.
Third, to better understand the crypto P&D phenomenon, we zoom in on the exchange level and on the
cryptocurrency pairings level. Binance’s exchange platform
boasts some of the market's lowest slippage rates and narrowest bid-ask spreads.
For example, in the US, large public companies file publicly
available reports with the Security Exchange Commission (SEC) which
are often analysed by professionals (US Securities and Exchange Commission 2017).
Access to and the verification of information is typically more difficult with microcap companies.
2017) here, Fig. 1 can be viewed as a script abstraction of three main stages-accumulation, pump, and dump. |
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