Pump-and-dump Definition - Glossary

Pump-and-dump is a fraudulent scheme boosting an asset's price, then selling for profit, leaving others with losses.

Pump-and-dump is an investment scam. It involves artificially inflating the price of an asset through misleading positive statements. Perpetrators buy large quantities of the asset, generating hype and encouraging others to buy. As demand increases, the price rises. Once the price peaks, the perpetrators sell their holdings at a profit. This sudden sale causes the asset's price to plummet. Unsuspecting investors are left with devalued assets and significant losses. Such schemes are illegal in regulated markets. However, they are more prevalent in unregulated or less regulated markets, including certain crypto exchanges. Always conduct thorough research before investing.