The internet slang term “Pump and Dump” refers to a fraudulent scheme primarily seen in the world of investing and cryptocurrencies. In this scheme, individuals or groups artificially inflate the price of a stock or cryptocurrency by spreading false or misleading information. This creates a sense of excitement and hype around the asset, luring unsuspecting investors to buy it at a higher price. Once the price has been pumped up considerably, those orchestrating the scheme sell off their shares, causing the price to crash. This leaves the unsuspecting investors with significant losses.
Example 1:
Person A: “I just came across this new cryptocurrency that’s about to take off! It’s going to increase 10 times in value within a week!”
Person B: “Be careful, that might be a pump and dump scheme. They could be trying to manipulate the price.”
Example 2:
Online Forum: “Huge news! XYZ Corp is releasing a revolutionary product next month. Now is the perfect time to invest in their stock!”
Investor: “I’m skeptical. It could be another pump and dump attempt to trick people into buying before they crash the stock price.”
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