Pump and Dump

What does Pump and Dump mean?

A form of market manipulation usually performed on small market cap stocks (or cryptocurrencies). This occurs when traders artificially inflate the assets price and then exit their positions, causing a price collapse. The price inflation is usually based on hype generated by those that already own the asset. This hype is typically misleading at best, and patently false at worst.

While there are currently no regulations prohibiting pump and dump schemes in cryptocurrencies, it is an illegal practice under securities laws when performed on stocks. We can imagine it is only a matter of time until laws are drafted that make it illegal in the cryptocurrency space, and there is every chance that these laws will be retroactive, opening the possibility of charges against those already participating in pump and dump schemes in the cryptocurrency space.