Understanding the risk of pump schemes and landfill in the Crypto currency
The world of cryptocurrency in recent years has been flourishing, and many new users have been entering the market daily. While the crypts of the currency sacrifice the high degree of liquidity and flexibility, they are not risk without risk. One of the most significant threats to investors is the pump and landfill scheme.
** What is pump scheme and landfill?
The pump and landfill scheme is a type of fraud with securities that involves artificial inflatable inflatable CRIPTO currency or other financial instrument by expanding false information about its value, making it more valuable than Actuilyy. The scheme relies on a group of individuals to artificially inflate the price with coordinated marketing, false news or other means.
** How do pumps and landfills work?
Pump schemes and landfills usually follow this procedure:
- Initial offer of coins (ICO) : the company creates a new crypto currency and starts ICO to raise funds from investors.
- Marketing campaign : The company begins marketing crypto currencies through social media, E E -Stage and other channels, creating Hype around its value.
- Price inflation : As more investors are bought in token, its price begins to grow rapidly, making it seem more valuable than it is real.
- False news : Fake stores or proceeds that you are an area from the perfection of the pump and the DUMP, which is further inflating the price.
- Dumping : When the price reaches a certain level, a group of individuals involved in the scheme sells their coins at an inflated price, causing a price drop.
Risks associated with pump schemes and landfills
Although the CRIPTO currency are generally considered to be low -risk investments, pump and landfill schemes can be significant risks. Here are some potential investments:
Loss of funds : Investors dealing with pump and landfill scheme can lose the overall investment if they are sold at an inflated price.
Loss of faith in the Crypto Currency
: A sudden loss of value can lead to the investors lose their faith in the crypto currency, which is why they left it or converted to other investments.
* Regulatory problems : pump schemes and landfills often explore regulatory bodies, which can be considered fraudulent with securities. This can result in monetary penalties, penalties or exclusion of the scheme.
Examples of famous pump and landfill schemes
Several high pump schemes have been exposed over the years. One notable example is the fraud on the crypto -valuti of one billion dollars of Bitconnect, where a group of individuals created false newspaper articles and posts on social media to promote its crypto currency, Bitconnect.
Another example is the 2017 ICO scandal, which included Bitconnect, Crincheck and Bitconnect, Executive Director, Kyubey Nakamura. The scheme included the spread of false data on the value of these crypto currencies, artificially inflating prices before throwing them out of loss.
How to protect yourself from pump schemes and landfills
To protect yourself from pump schemes and landfills:
Explore your research : Before investing in any crypto currency, thoroughly explore the project and understand its fundamental technology, the team and the market.
* Check the information : Be different from fake news or posts. Check the information through reputable sources before sharing them with others.
* Diversify your portfolio : Spread your investments in multiple currency currency to reduce your risk.
* Follow regulatory activity : Be ongoing with regulatory development relating to the cryptocurrency industry.
Conclusion
Crypto currency is a high risk investment, and pump schemes and landfills are just one of many potential risks. Understanding these schemes and taking steps to protect yourself, you can make informed decisions about your investment and reduce risk exposure.