Quarter of New Crypto Tokens in 2022 Were Pump and Dumps: Creators Bagged $30 Million

The explosive growth of cryptocurrency in recent years has been accompanied by a concerning trend: the proliferation of "pump and dump" schemes. A significant portion of newly created tokens quickly surge in value due to coordinated hype, only to plummet just as rapidly, leaving unsuspecting investors holding worthless assets. Disturbingly, a large percentage of tokens launched in 2022 were identified as such schemes, allowing their creators to profit handsomely.

The Rise of Crypto Pump and Dumps

These schemes exploit the often-unregulated nature of the cryptocurrency market and the enthusiasm of new investors eager to capitalize on the next big thing. Creators generate hype through social media, online forums, and paid endorsements, driving up the token\'s price. Once the price reaches a certain point, the creators sell off their holdings (the "dump"), leaving other investors with substantial losses.

$30 Million in Creators\' Pockets

Estimates suggest that creators of these pump and dump tokens raked in a staggering $30 million in 2022 alone. This figure highlights the scale of the problem and the urgent need for increased regulation and investor education. The ease with which these tokens can be created and promoted, coupled with the lack of robust oversight, makes the market vulnerable to manipulation.

In a study of the 1.1 million tokens created in 2025, Chainalysis pinpointed 40,521 as having gained enough trading action on the crypto market to be evaluated. Of those, a significant number exhibited characteristics of pump and dump schemes, revealing that despite increased awareness, the problem persists.

Protecting Yourself From Pump and Dump Schemes

While the potential rewards of investing in cryptocurrency can be tempting, it\'s crucial to exercise caution and conduct thorough research before investing in any new token. Here are some tips to protect yourself:

• Be wary of excessive hype: If a token\'s value is being driven primarily by social media buzz and celebrity endorsements, proceed with caution.
• Research the team behind the token: Are they reputable? Do they have a proven track record?
• Understand the token\'s utility: What problem does the token solve? Does it have a viable use case?
• Look for red flags: Is the token\'s supply highly concentrated in the hands of a few individuals? Is the code unaudited?
• Don\'t invest more than you can afford to lose: Cryptocurrency investing is inherently risky.

The prevalence of pump and dump schemes in the cryptocurrency market serves as a reminder of the importance of due diligence and informed decision-making. By understanding the risks and taking appropriate precautions, investors can protect themselves from becoming victims of these fraudulent schemes.