Many people try to profit from the crypto market, but especially beginners are more likely to fall victim to scams. Among them, the most troublesome is pump-and-dump. It’s illegal in the stock market, but in the crypto world it’s still carried out frequently. This time, I’d like to talk about how this scam works and how to protect yourself.

What is a pump-and-dump? Simply put, it’s a financial scam that intentionally manipulates the price of an asset. Basically, it’s a two-step strategy: “inflate the price, then sell everything at once.” First, the scam group buys a large amount of low-value cryptocurrencies. After that, they start actively promoting the coin in private groups—such as on SNS and Telegram. This false marketing drives inexperienced investors into FOMO—“regret if you miss out on the chance”—and they begin buying one after another. This is the first stage of the pump. Once the price reaches its peak, the organizers sell all at once. This is the second stage, the dump: the price crashes, and investors who joined later end up taking huge losses.

There are several points to help you spot a pump-and-dump scam. First, it’s suspicious when an unknown cryptocurrency suddenly surges in a short period without any clear reason. These coins usually start from a state where liquidity is almost nonexistent. Next, be careful if influencers are urgently promoting “profits immediately” on X (formerly Twitter), Telegram, Reddit, and similar platforms. Their enthusiasm might be part of the manipulation. It’s also dangerous if the project itself has no real utility and there isn’t even a genuine problem it’s trying to solve. Finally, there are cases where clearly organized groups publicly plan and drive pump-and-dump schemes. Joining such groups may even mean becoming part of the scam.

So, how do you protect your investments? First and foremost, don’t buy a cryptocurrency you don’t know just because someone is talking about it on social media. You need to do your own research and confirm that the project actually exists, has a technical foundation, and is truly being used. Next, absolutely don’t fall for stories about “making a huge profit overnight.” Crypto investing requires patience, and real gains are earned over time. Diversifying your portfolio is also important. Concentrating all your funds into a single coin is too risky. By investing in a balanced way—including projects that are well recognized in the market—you can minimize the impact of losses caused by scam schemes.

Choosing an exchange is also important. Avoid unknown platforms that aren’t regulated, and use large, well-regarded exchanges that meet compliance and security standards. Because these exchanges tend to list more serious projects, the likelihood of getting caught in scams like pump-and-dump is lower. Also, always keep an eye on market movements. By focusing on the trading volume and price patterns of the currencies you hold or are considering buying, you can notice unnatural fluctuations or sudden spikes in trading volume. These are all warning signs that suggest manipulation may be taking place.

If you’ve already fallen victim to a pump-and-dump scam, you should avoid panic selling. Selling in a rush can make fear become reality. Instead, analyze the project calmly, assess whether there’s potential for long-term recovery, and try to minimize your losses. And importantly, report the scam. By reporting it to the platform, you can help prevent other investors from falling into the same trap. The more this information is shared, the harder it becomes for scammers to continue their scheme.

Pump-and-dump remains a major threat that still exists in the crypto market. To protect your investments, it’s essential to stay alert, deepen your knowledge, and act carefully. If you found this article helpful, please share it with others. If more people are able to avoid this trap, the overall market should become healthier.