About

Pump and Dump is a phrase used to describe a type of investment fraud where stock owners artificially inflate the price of a stock (pump) and then sell their cheaply purchased and overvalued shares (dump), causing the overall price to fall for remaining investors. This fraudulent practice is most popular in smaller companies with "microcaps" and small-cap cryptocurrencies like meme coins. Some internet users have argued that meme coin trading sites like Pump.fun encourage pump-and-dump style fraud.

Origin

The term "pump and dump" originates from traditional stock market fraud where operators manipulated stock prices to attract investors, and then sold off their holdings, leaving others with losses. Jordan Belfort ran a pump-and-dump scheme that involved selling penny stocks to unaware investors and was jailed for fraud in 1999. His life was adapted into the 2013 film Wolf of Wall Street.

This practice has transitioned to cryptocurrencies, especially meme coins, due to their speculative nature and lack of intrinsic value. Early crypto pump-and-dump schemes became prominent during the 2017 ICO boom. Coordinated efforts on forums and social media, like Reddit and Telegram, hyped coins to inflate prices artificially. When orchestrators cashed out, the coin values collapsed, as seen in cases like BitConnect. Low liquidity and community-driven marketing further make meme coins easy targets. These schemes exploit low entry barriers and investor inexperience, leveraging misinformation and herd mentality.

The official SEC^[1] page for the phrase "pump and dump" was last edited on August 7th, 2006.

Spread

On August 17th, 2020, X^[2] user @TheStalwart quoted a now-deleted video of Dave Portnoy, owner of Bartstool Sports, claiming that he appreciates cryptocurrencies because of how easy it is to run pump and dump schemes using it.

On February 13th, 2021, Redditor^[4] /u/thesoundmindpodcast posted a Is This A Pigeon meme to Reddit's /r/RobinHoodPennyStocks, gathering over 1,000 likes in four years.

On October 28th, 2021, Coffeezilla+ posted a tweet^[3] pointing out how a CryptoPunks owner was artificially inflating the price of his holding by buying it for a large amount and then transferring it back to themselves.

$PEPE

$PEPE was launched in April 2023, gaining hype on Crypto Twitter and surging over 21,000% within days. Its creators leaned heavily on internet meme culture, branding the token with humor and a circulating supply referencing the numbers 420 and 69. Early trading showed whales acquiring vast amounts of PEPE at low prices, holding tokens worth millions as the price skyrocketed. This sparked speculation that insiders were manipulating the market.

Critics pointed out the red flags, including unrealistic claims, high volatility, opaque developer identities, and rapid social media follower growth. Eventually, insider wallets holding substantial PEPE supplies contributed to the price collapse.

Hawk Tuah Coin

In 2024, Haliey Welch aka the Hawk Tuah Girl became embroiled in controversy after launching a meme coin many internet users deemed to be a version of a pump and dump. In what is known as a rug pull, Welch's team artificially inflated the price of $HAWK by holding over 97% of the token supply and immediately selling upon launch, liquidifying the cryptocurrency.

The meme coin was launched on the Solana (SOL) blockchain in early December 2024, soaring to a market cap of roughly $500 million before crashing below $60 million in just 20 minutes.

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