If you want to know how people keep losing money in crypto, this is it. A new type of scam is going around and these scams are using fake headlines, celebrity deepfakes, and social media manipulation to pump worthless coins before pulling the rug on unsuspecting traders. It’s the same old play, but this time the tools are smarter and the lies are more convincing.
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How These Pump-and-Dumps Actually Work
At the core, this scam is about driving up a coin’s price by creating fake demand, then selling off the top before the market figures it out. It usually happens in four stages.
First is the pre-launch. Scammers quietly set up a token and create hype in private chat groups like Telegram or Discord. They might offer early access to a “community” or mention a mystery investor. All of it is designed to make you feel like you’re getting in early on something big.
Then comes the launch. They push the token onto a decentralized exchange, slap a logo on it, and start promoting it across X (formerly Twitter), TikTok, and even Reddit (RDDT). Sometimes they even pay influencers, or impersonate them, to hype the coin. The goal is to attract attention from retail traders.
Next is the pump. This is where things escalate fast. Fake news headlines, AI-generated press releases, and even deepfake videos of Elon Musk or MrBeast start circulating, making it look like the project is about to take off. People start buying in rapidly, chasing the price as it climbs. That creates momentum, which draws in even more buyers.
Finally, the dump. The creators, who have been holding most of the tokens since day one, sell everything. That sudden selling pressure crashes the price. Anyone still holding the token watches their investment disappear almost instantly. Because there was never any real utility or value, the price doesn’t recover.
Why Crypto Keeps Falling for This
The reason this keeps working is because crypto markets are still lightly regulated, open all the time, and easy to manipulate. Anyone can create a coin in minutes and give it a name that sounds vaguely credible. There are no listing requirements, no disclosures, and no circuit breakers. And because people trade using pseudonyms or burner wallets, it’s difficult to track who’s behind a scam until it’s too late.
Another factor is that social media has become a core part of crypto culture. Traders rely heavily on influencers, tweets, and group chats to make decisions. That makes it easy for bad actors to inject fake narratives into the ecosystem and move prices based on lies rather than facts.
Platforms like Pump.fun have made things worse. In 2024 alone, over a million tokens were launched there. Most had no purpose beyond speculation, and many were outright scams.
Fake Media and AI Make the Scam Look Legit
In older scams, the red flags were obvious. These days, scammers use AI to cover their tracks and make everything look more real. A fake YouTube video might show a famous investor endorsing the token. A cloned website might claim the coin is partnering with Google (GOOGL) or Meta (META). Even screenshots of fake exchange listings are being circulated to trick people into thinking the token is about to get listed on Binance or Coinbase (COIN).
The point is that fake credibility creates real buying. By the time the truth surfaces, it’s too late.
How to Avoid Being the Exit Liquidity
There are a few simple rules that can help you avoid getting caught in one of these schemes.
First, don’t trust investment tips from strangers on social media. If someone messages you out of nowhere telling you to “buy this now,” block them and move on. Second, verify everything. If a celebrity is promoting a coin, go check their official page to see if it’s real. Don’t trust screenshots or reposts.
Next, pay attention to the token’s history. If it launched yesterday and is already “going to the moon,” something’s wrong. Real projects take time to build. If there’s no whitepaper, no working product, and no identifiable team, assume it’s a scam.
Lastly, don’t invest based on hype alone. If everyone around you is talking about easy 10x returns, take a step back. Greed clouds judgment, and these scams rely on emotion. Stick to fundamentals and always do your own research.
Investors interested in crypto should stay informed by tracking the prices of their favorite cryptocurrencies and using technical analysis tools on the TipRanks Cryptocurrency Center. Click on the image below to find out more.
