In its latest report, Chainalysis reveals that 24% of cryptocurrencies launched on the market in 2022 are just simple scams. The scheme is based on the principle of pump & dump, which consists of artificially increasing the value of a token to make it plunge as soon as a few victims have fallen into the trap.
It will have escaped no one that the world of cryptocurrencies is full of scams of all kinds. When it’s not the giants of the sector like Bitcoin or Ether that fall without warning, it’s the false advertisements, pirates and other disastrous investments that must be avoided. But most impressive is doubt the proportion of these scams compared to real currencies.
In its latest report, Chainalysis, a company specializing in cybersecurity and in particular cryptocurrencies, writes that no less than 1,105,239 tokens were born in 2022. Of course, the vast majority of these tokens die in the days that follow. their arrival on the market. So only 40,521 of them still exist after 4 days. If the bar is already low, it is even worse when calculating the number of scams among survivors.
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One out of 4 cryptocurrencies is a “pump & dump” scam
Indeed, of these few tens of thousands of nascent tokens, Chainalysis notes that almost 10,000 of them see their value drop by 90% after only one week of existence. And this is no coincidence. According to Chainalysis, nearly a quarter of tokens are actually scams, which are based on the principle of “pump & dump”.
The idea is as follows: launch a new token on the market, buy assets at the lowest price and massively in order to inflate its value, then, once several fish have bitten the hook, resell all of its possessions at the highest price before disappearing into thin air. In addition, attach strong news to your token, such as the fall of Bitcoin or the takeover of Twitter, and you are certain to make victims.
Source: Chainalysis