5 steps to prevent being a victim of a cryptocurrency ’pump and dump’

<p>At the best of times, the world of cryptocurrency can be perplexing and difficult to navigate. And, unfortunately, there are a number of individuals out there attempting to profit from the misunderstanding through 'pump and dump' schemes.</p> <p>I'm going to explain all you need to know about these scams, including how to avoid them and why high-profile celebrities like Kim Kardashian and Floyd Mayweather Jr. fell for them.</p> <p>What is a crypto pump and dump scheme?</p> <p>A pump and dump scheme involves intensively marketing an asset (sometimes with bogus benefits) in order to artificially inflate its price. Individuals are urged to invest their money and acquire the asset. Then, as the value increases dramatically, those promoting or possessing a significant position sell their interests, precipitating a price crash.</p> <p>'Pump and dump' is one of the most vulgar-sounding words in finance, and it is not limited to cryptocurrency scams. There have been numerous instances of this occurring with common stocks. That said, it is significantly less prevalent and is most frequently seen in penny stocks.</p> <p>Another common cryptocurrency fraud is the 'rug pull,' which operates in a slightly different manner. While a pump and dump operation results in some liquidity after fraudulently inflating an asset, a rug pull operation results in the entire disappearance of a project. And the project's creators keep everything!</p> <p>How can you avoid financial loss in a pump and dump situation?</p> <p>Co-founder of Crypto Head, Adam Morris, provides his top five advice for avoiding pump and dump schemes:</p> <p>1. Be suspicious of large returns</p> <p>If something appears to be too good to be true, it most likely is. As a result, always conduct additional research into any platforms or initiatives offering absurd returns. The same is true for people who promote a scheme as a surefire method of earning money.</p> <p>2. Avoid celebrity counsel</p> <p>Celebrities frequently possess highly specialised talents o