Over 9,000 New Tokens in 2022 Were Fraudulent Pump-and-Dump Schemes

A recent study by blockchain analytics firm Chainalysis revealed that 24% of the tokens launched in 2022 had the characteristics of pump-and-dump schemes. These schemes involve the creators of a digital asset hyping and promoting the token, often with misleading statements, which would cause the price to surge rapidly as new investors join the project. The creators would then sell their holdings and amass profits while the price of the token plummets, leaving the investors stuck with low-value assets. Chainalysis found that only 40,521 tokens gained traction out of the 1.1 million new tokens launched on Ethereum and BNB Chain in 2022, and that 9,902 (24%) of these tokens declined significantly in the first week after launch, showing signs of possible pump-and-dump activity. Victims of the pump-and-dump schemes spent and are stuck with roughly $4.6 billion in crypto, while the creators amassed $30 million in profits after selling their holdings. An on-chain pattern also suggested that the wallets involved in the schemes share common ownership. Chainalysis used an evaluation service to score new tokens on a scale of zero to 100 based on their trustworthiness, and all 25 that were evaluated scored zero, indicating that they were most likely pump-and-dump schemes.