Pump and Dump

A pump and dump is a ponzi-like scheme in which the investors drive up the price of an asset and then mass sell at the highest price level, causing a rapid decrease in the price of said asset. These schemes are often well coordinated, with the aim of buying an asset with a cheap price and selling it at a high price. The most common methods of luring in investors have been social media, spam email and false information. Arguably the most infamous and elaborate pump and dump scheme was committed by Enron in 2001. Company executives massively overvalued the stock before the company collapsed. Due to its under regulated and instant transaction attributes, pump and dumps have been especially present in the cryptocurrency industry.

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