Pump-and-dump schemes dominate the cryptocurrency market

Scammers have been successfully manipulating the price of digital assets including Bitcoin so they can dump their holdings onto unsuspecting traders at a higher price, according to a new academic paper mapping out the extent of market abuse in cryptocurrencies.

Researchers identified 4,818 so-called pump-and-dump attempts between January and July, using data scraped from Telegram and Discord, two encrypted messaging apps popular with the cryptocurrency community. The scale of the fraud is “widespread and often quite profitable,” and should alarm regulators, according to the draft published in SSRN, a repository of academic research.

“The proliferation of cryptocurrencies and changes in technology have made it easier to conduct pump and dump schemes,” academics from the University of Tulsa, University of New Mexico and Tel Aviv University wrote. “While the fundamentals of the ruse have not changed in the last century, the recent explosion of nearly 2,000 cryptocurrencies…