“Pump and dump scams – can a secure cryptocurrency exchange help avoid them?

Cryptocurrencies have become very popular in recent years, providing people with new and exciting opportunities. However, with its growing popularity, the cryptocurrency space has also seen an increase in scams, including “pump and dump” scams.

In this article, we will examine what “pump and dump” fraud is and provide basic guidelines on how to avoid it. We will also highlight how using a secure cryptocurrency exchange can be a crucial step in protecting your assets.

Understanding “pump and dump” fraud

“Pump and dump scams are a fraudulent practice in the cryptocurrency world. Here’s how they usually work:

• Pump: a group of individuals or entities artificially inflates the price of a particular cryptocurrency. They do this by spreading positive rumours, aggressive marketing and creating a sense of urgency.
• Dump: After artificially inflating the price and attracting a large number of unsuspecting individuals, criminals sell off their holdings at inflated prices, causing the price to fall rapidly.

How safe use of cryptocurrency exchanges can help

One of the most effective ways to avoid falling victim to pump and dump scams is to use a secure cryptocurrency exchange. These entities prioritise the listing of trustworthy cryptocurrency projects and follow strict rules, making them a safer choice for customers.

Secure cryptocurrency exchanges, such as our own Bintense exchange, have a rigorous vetting process for cryptocurrency listings. Before we disclose a project to our clients, we conduct thorough due diligence, assessing factors such as the project team, technology, use case and community support.

By listing only legitimate projects, trusted exchanges can reduce the likelihood of “pump and dump” schemes on their platform. In fact, many exchanges are actively working to detect and prevent such scams to protect their users.

How to avoid “pump and dump” scams

1. Research: before you buy any cryptocurrency, do your research. Understand the project, the technology and the real-world use case. Secure cryptocurrency exchanges often provide detailed information about listed projects that can help you make informed decisions.
2. Avoid advertising: be wary of cryptocurrencies that are highly advertised and promise guaranteed high returns. If something sounds too good to be true, it probably is.
3. Stay informed: keep yourself up-to-date with the latest news and developments in cryptocurrencies. This will help you spot unusual price changes and suspicious activity.
4. Be careful: don’t get FOMO (Fear of Missing Out). Even if a cryptocurrency is appreciating rapidly, it is important to be careful not to rush into buying it without doing thorough research.

In summary, pump and dump scams are a common threat in the cryptocurrency world, but by following a few simple guidelines, you can minimise your risk of falling victim. Using a secure cryptocurrency exchange that only lists reputable cryptocurrency projects is an essential step to protect your cryptocurrency holdings. We at Bintense recommend that you always do your research, stay informed and be cautious when navigating the exciting but volatile world of cryptocurrencies.