Scammers buy a cheap, unknown cryptocurrency and hype it up on social media (Telegram, Discord, Twitter) to attract investors.
The Mechanism
1. Accumulation: Scammers buy low.
2. Pump: They spread rumors that the coin is the 'next Bitcoin'.
3. FOMO: Regular investors rush in, driving the price up.
4. Dump: Scammers sell their holdings at the peak, crashing the price.
Protection
- Research the project team and utility.
- Be skeptical of 'guaranteed' 100x gains.
- Avoid coins that are only promoted by social media influencers.