August 4, 2025
5 min read
Marcel Deer
Discover how fake news and deepfakes drive crypto pump-and-dump scams and learn to spot and avoid these manipulative schemes in Web3.
How Fake News and Deepfakes Fuel the Latest Crypto Pump-and-Dump Scams
Web3 pump-and-dump schemes thrive on hype, anonymity, and unregulated markets. Understanding their playbook is key to avoiding costly traps.Key Takeaways
- Pump-and-dump schemes in Web3 manipulate cryptocurrency prices through coordinated buying and misleading hype, luring investors before orchestrators sell off tokens, leaving them nearly worthless.
- Decentralized anonymity and 24/7 unregulated trading make the crypto industry especially vulnerable to these manipulative schemes.
- These schemes typically follow four stages: token prelaunch, promotional hype at launch, price pumping via buying, and a coordinated sell-off.
- Protect yourself by avoiding unsolicited investment advice, being skeptical of social media ads, and steering clear of promises of unrealistic short-term returns.
- Pre-launch: Hype builds around a new or low-valued token via pre-sales and community-building on platforms like Telegram, Discord, and X (formerly Twitter).
- Launch: Promotion intensifies, often involving unsuspecting influencers to widen reach and attract investors.
- Pump: Fake or misleading news spreads about potential price surges or partnerships, driving demand and skyrocketing the token price.
- Dump: Orchestrators sell off large token amounts at peak prices, causing supply to overwhelm demand and prices to crash. Investors are left holding nearly worthless tokens.
- Avoid unknown investment advice: Be wary if strangers on social media or messaging apps push “sure thing” investments.
- Be skeptical of crypto social media ads: Many ads promise high returns and may use fake media or deepfakes of celebrities without consent.
- Do your own research: Avoid pressured “now or never” investments. Investigate project founders, developers, and track records before committing funds.
- Spread your risk: Don’t put most of your funds into one investment. Diversify to mitigate losses from potential market manipulation.
- How to Spot and Avoid Crypto Scams
- The Ultimate Guide to Cryptocurrency Security
- Understanding Market Manipulation in Crypto
What Are Pump-and-Dump Schemes in Web3?
A pump-and-dump scheme refers to the intentional manipulation of a cryptocurrency or blockchain asset’s price. Coordinated buying combined with misleading information artificially inflates the token’s market price. Once the orchestrators reach their target price, they sell off their holdings rapidly, causing the token’s value to plummet. Investors left holding the tokens suffer severe losses as the price rarely recovers.Why Do Pump-and-Dump Schemes Work in Web3?
The decentralized, peer-to-peer design of Web3 creates fertile ground for these manipulative schemes. Token creators and project developers often hide behind internet anonymity and use privacy-focused channels like Telegram, making accountability difficult. Additionally, crypto markets operate 24/7 without robust regulatory oversight or circuit breakers. Easy token creation platforms, such as Pump.fun—which launched over 1 million tokens in 2024—exacerbate the problem.Did you know? Insiders in pump-and-dump schemes can net profits exceeding 100%, with some cases reaching over 2,000% in a single event.
How Pump-and-Dumps Work in Web3
Pump-and-dump schemes generally follow four stages:Did you know? Some coins face repeated pump-and-dump attacks. A University of Bristol study found the most targeted coin was attacked 98 times over four years.
Staying Safe and Spotting Pump Schemes in Crypto
Distinguishing manipulation from legitimate investment opportunities can be challenging. Here are tips to protect yourself:This article does not contain investment advice. All trading involves risk; always conduct your own research before making decisions.