The Cryptocurrency “Pump-and-Dump”

Abstract

This chapter describes the author's personal experience as a member of a crypto-trading “pump-and-dump” group – groups organized on Reddit and Discord channels that use social media to spread positive misinformation about a cryptocurrency in order to temporarily inflate its value and collect huge profits. It discusses the nature of cryptocurrency marketplaces, social networking related to crypto, the pump-and-dump phenomenon, its social and economic impacts, and ethical concerns. Following the rise in the value of Bitcoin and the WallStreetBets/GameStop saga in December 2020 and January 2021, these pump-and-dump groups used the frenzy surrounding “get rich quick” investing to generate inordinate profits off of these ambitious individuals' losses. Rallying around a shared philosophy and profit motive, these groups utilized social media disinformation campaigns to fool new crypto investors in squandering their funds, often while failing to acknowledge the legal and ethical conundrum of stealing from the poor and ambitious.