What is a pump and dump? How price-rigging scams work
By SendPay Business · · 2 min read
A pump and dump is a scam where a group buys a cheap, little-traded coin or share, hypes it up to push the price higher, then sells everything at the top. The price collapses and the people who bought on the hype are left with the losses.
How it works
- Promoters quietly buy a small, thinly traded asset.
- They hype it on social media, chat groups or paid promotions.
- New buyers pile in and the price shoots up.
- The promoters sell into the rush, and the price crashes.
Warning signs
Sudden hype about an obscure coin or share, promises of quick gains, pressure to buy right now, anonymous promoters, and a price that jumps without any real news are all red flags.
Is it illegal?
In regulated stock markets, pump and dumps are market manipulation and are illegal in the UK, US, EU and most other places. In crypto the picture has been patchier, but rules such as the EU's MiCA now include market abuse rules for crypto assets.
Where SendPay fits
If you run a crypto platform, protecting your customers from scams builds trust. A SendPay Crypto Exchange platform lets your customers buy, sell and hold crypto in your own branded app, with assets held with regulated partners.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
What market cap would a price target need?
Work out a coin's market cap and the price it would need to match another.
Crypto market cap calculator →Can I launch my own crypto exchange?
Yes, a branded app where customers buy, sell and hold crypto.
Crypto exchange platform →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.