The surge of interest in cryptocurrencies has been accompanied by a proliferation of fraud. This paper examines pump and dump schemes. The recent explosion of nearly 2,000 cryptocurrencies in an unregulated environment has expanded the scope for abuse. We quantify the scope of cryptocurrency pump and dump on Discord and Telegram, two popular group-messaging platforms.We joined all relevant Telegram and Discord groups/channels and identifiednearly 5,000 different pumps. Our findings provide the first measure of the scope of pumps and suggest that this phenomenon is widespread and prices often rise significantly. We also examine which factors affect the pump’s “success".
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Analyzing Target-Based Cryptocurrency Pump and Dump Schemes
As the number of cryptocurrencies has exploded in recent years, so too has the fraud. One popular strategy is when actors promote coordinated purchases of coins in hopes of temporarily driving up prices. Prior work investigating such pump and dump schemes has focused on the immediate impact to prices following pump signals, which were largely interpreted as following the same strategy. The reality, as with most cybercrimes, is that the operators of the schemes try out a much more heterogeneous mix of tactics. From a population of 12,252 pump signals observed between July 2017 and January 2019, we identify and examine 3,683 so-called target-based pump signals that announce promoted coins alongside buy and sell targets, but without a coordinated purchase time. We develop a strategy to measure the success of target pumps over longer time horizons. We find that around half of these pumps reach at least one of their sell targets, and that reaching their peak price often takes days, as opposed to the seconds or minutes required in pumps studied previously. We also examine the various groups promoting coins and present evidence that groups try a variety of distinct strategies and experience varying success. We find that the most successful groups promote many coins and issue many pumps, but not for the same coins. As decentralized finance becomes more popular, a deeper understanding of price manipulation techniques like target pumps is needed to combat fraud.
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- Award ID(s):
- 1714291
- NSF-PAR ID:
- 10302256
- Date Published:
- Journal Name:
- DeFi '21: Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security
- Page Range / eLocation ID:
- 21 to 27
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Conference Paper:
- https://doi.org/10.1145/3464967.3488591
