A recent study has found that pump and dump schemes account for about $7 million worth of trading volume per month, MIT Technology Review reported Dec. 4. The analysis was performed by researchers Jiahua Xu and Benjamin Livshits at Imperial College London.
A pump and dump scheme is a form of securities fraud that has also become common in the cryptocurrency space. The organizers of the scheme choose a coin, boost its price and then “dump” sell their overvalued currency, which further leads to the price falls and losses among the investors.