Cryptocurrencies have exploded in popularity over the past few years, with many investors seeing them as a potentially lucrative investment opportunity. However, not all crypto projects are created equal, and some have turned out to be scams or failures. In this blog post, we’ll explore some of the most obvious failed or scam crypto projects, with a focus on the concept of pump and dump.
What is pump and dump?
Pump and dump is a scheme in which a group of individuals or entities artificially inflate the price of a cryptocurrency by promoting it and buying large amounts of it. Once the price has been pumped up, the individuals or entities will then sell off their holdings, causing the price to crash.
Pump and dump schemes are often orchestrated by groups of individuals on online forums or through private chat groups. They can be difficult to spot, as the individuals or entities behind them often try to conceal their activities. However, there are a few red flags to watch out for, including:
- Unsolicited emails or messages promoting a specific cryptocurrency
- Unusually high trading volume for a particular cryptocurrency
- A sudden, sharp increase in the price of a cryptocurrency
Now, let’s take a look at some of the most obvious failed or scam crypto projects that have been involved in pump and dump schemes:
- OneCoin
OneCoin was a cryptocurrency project that claimed to be a legitimate alternative to Bitcoin. However, it was eventually revealed to be a Ponzi scheme, with the creators using the funds from new investors to pay off earlier investors. OneCoin was heavily promoted through a network of affiliates, who were encouraged to recruit new investors in exchange for commissions.
- BitConnect
BitConnect was a cryptocurrency project that promised investors returns of up to 40% per month through a lending program. However, the project was eventually shut down by the Texas State Securities Board, which accused it of operating as a Ponzi scheme. BitConnect was known for its aggressive marketing tactics, which included paying celebrities to promote the project and hosting lavish events.
- PlusToken
PlusToken was a cryptocurrency project that promised investors returns of up to 18% per month through a “wallet” system. However, it was eventually revealed to be a Ponzi scheme, with the creators using the funds from new investors to pay off earlier investors. PlusToken was particularly successful in Asia, with many investors losing significant amounts of money when the scheme collapsed.
- DavorCoin
DavorCoin was a cryptocurrency project that promised investors returns of up to 48% per month through a lending program. However, it was eventually shut down by the US Securities and Exchange Commission (SEC), which accused it of operating as a Ponzi scheme. DavorCoin was heavily promoted through social media and other online platforms, with many investors losing significant amounts of money when the scheme collapsed.
- BitGem
BitGem was a cryptocurrency project that promised investors returns of up to 7% per week through a “mining” program. However, it was eventually revealed to be a Ponzi scheme, with the creators using the funds from new investors to pay off earlier investors. BitGem was known for its aggressive marketing tactics, which included paying affiliates to recruit new investors.
In conclusion, pump and dump schemes are a common tactic used by failed or scam crypto projects to defraud investors. These schemes can be difficult to spot, but there are a few red flags to watch out for, including unsolicited emails or messages promoting a specific cryptocurrency, unusually high trading volume, and a sudden, sharp increase in the price of a cryptocurrency. To protect yourself from falling victim to these schemes, it’s important to thoroughly research any crypto project before investing, and to be wary of any project that promises unrealistic returns.