pumpendump

Pumpendump, also known as a pump-and-dump, is a fraudulent scheme in which individuals or groups attempt to inflate the price of a tradable asset through false or misleading promotions, then quickly sell their holdings at the higher price. The result is a rapid price rise followed by a sharp decline, leaving later investors with losses. The combined term emphasizes the two stages of manipulation: inflating the price (pump) and exiting (dump).

Typically, organizers first accumulate a position in a thinly traded asset. They then disseminate optimistic but unsubstantiated claims through social media, messaging apps, forums, or newsletters to attract buyers. As demand grows, the price climbs; the promoters begin selling into the rising market. Once most of the stock or coin is distributed, demand wanes, the price collapses, and late participants incur losses.

Pumpendumps are forms of market manipulation and are illegal in many jurisdictions when the asset is a security or falls under securities laws. Regulators such as the U.S. Securities and Exchange Commission and equivalent bodies prosecute or sanction participants in stock market cases; crypto-related schemes face varying degrees of enforcement depending on jurisdiction and whether the asset is classified as a security. Exchanges may suspend activity or delist assets tied to manipulation.

Common red flags include sudden price surges with little substantive news, disproportionate promotional activity, coordinated messages across channels, and unusual trading volume. Investors are advised to perform independent due diligence, verify information through credible sources, diversify holdings, and avoid assets promoted primarily through hype. Education, liquidity, and robust exchange surveillance help reduce exposure to pumpendumps.