Pump and dump
Pump and dump (P&D) is a form of scam that involves inflating the price of an coin through false and misleading positive statements, in order to sell the cheaply purchased coin at a higher price. Once the operators of the scheme "dump" (sell) their overvalued coins, the price falls and investors lose their money. This occurs very commonly in small market cap cryptocurrencies.
Structure
The structure of a pump and dump consists of 4 main phases. Pre-pump announcement, Pump, Dump, Post-dump review.[1]
Pre-pump announcement: the operator, often a group admin, announces details of the next pump a few days ahead. The admins broadcast the exact time and date of the announcement of a coin and it's corresponding exchange which would then precipitate a pump of that coin on the day.
Pump: At the pre-arranged pump time, the admin announces the coin and urges members to buy and hold the coin in order to inflate the coin price. During the first minute of the pump, the coin price surges, sometimes increasing several fold. Often times, it is the admins of the groups who benefits the most as they are able to buy the coins at a much earlier time.
Dump: A few minutes (sometimes tens of seconds) after the pump starts, the coin price will reach its peak. While the admin might shout “buy buy buy” and “hold hold hold” in the channel, the coin price keeps dropping.
Post-dump review: Within half an hour, after the coin price and trading volume recover to approximately the pre-pump levels, the admin posts a review that only includes the start price and peak price to attract more members.