Crypto Fraud Surge: Chainalysis Reports Rising Pump-and-Dump Schemes
- Chainalysis reports 5% of crypto tokens launched in 2024 show pump-and-dump scheme characteristics.
- Over 3 million tokens were launched in 2024, but only 1.7% saw active trading, highlighting a huge gap.
- $2.57 billion in wash trading occurred in Ethereum, BNB Chain, and Coinbases Base, distorting market perception.
As per the blockchain forensic company Chainalysis, by 2024, about 5% of the crypto tokens launched in the market had characteristics of pump-and-dump schemes. The findings by the firm published on the 29th of January show that fraud remains a significant issue in the crypto space.
According to a recent report, there were more than 3 million tokens launched in the year 2024, of which more than 1.3 million tokens could be traded on DEXs. However, 1.7% of these tokens were traded in the last 30 days, which shows that there is quite a difference between the initial interest and actual trading volumes.
Source: Chainalysis
Crypto Pump-and-Dump Schemes
The firm believes that most of the tokens may have been abandoned soon after their creation, which may have been a result of lack of interest. However, the analysts also point out that some of these tokens could be part of premeditated schemes with the intention of making quick gains, pump and dump as well as rug pull schemes.
The report also states that about 90% of the DEX pools connected to pump-and-dump scams were rug-pulled by the same address that initiated the pool. In other cases, the drains were made by addresses funded by the pool or token creator, which suggests that the attacks were premeditated and targeted at innocent users.
Fraudulent Activities in Crypto
Also, a similar study by Chainalysis revealed that major wash trading activities were observed in Ethereum, BNB Chain, and Coinbases Base blockchain network. The total wash trading volume of these platforms in 2024 was approximately $2.57 billion, which implies that some traders are likely to be manipulating trading volumes to distort the market perception.
The firm admitted employing a variety of strategies to reveal different forms of wash trading, thus, the real level of such behaviour might be even greater. This form of manipulation is not good for the crypto market as it may lead to wrong prices and wrong market signals.
These findings call for concern on the high levels of fraudulent activities taking place within the crypto markets. The increase in pump and dump schemes, rug pulls, and wash trading creates the need for better regulation and improved methods of investor protection.
In the course of the markets growth, it is necessary to enhance the regulation of the market, specialists say. These manipulations could damage the credibility of the crypto market if there are no measures to prevent them and put off investing in the industry.
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