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The Business Behind Pump and Dumps: An Inside Look

Pump and Dumps are the banes of any growing market, where most lose while a select few make a generous profit. The ethics of this business is murky at best and downright abysmal at worse.

Now while these Pump and Dump groups have started to lose effectiveness as the market cap for cryptocurrency grows which raises the amount of buying power needed to make movement in the market, they still have quite a bit of power and wealth behind them. Let us look at these groups and the business behind their wealth.  We will be looking at these from the perspective of an insider not quite at the top (no one up there would give us the time of day) but not at the bottom.

 

Infrastructure

Despite what you may be led to believe in the structure of a pump group there are many facets of the business outside of the pumper and the admins.

You will rarely see a lone pump group as they generally work together either at a single fixed time or at a delayed rate.

For example, there will be an admin group filled with anywhere from 5-20 Pump Admins who’s creator/leader will decide upon a coin than by size the groups will announce the coin to whatever paid groups. Once the coin is announced to the paid groups it is given to the secondary members (people who are connected to the paid groups through members who share the information in smaller branch groups). Then finally it hits the pump groups that are open access, by then the coin will have gone up quite a bit before the members get involved.

 

Who has and where is the money?

 

  • Pump Admin Group Leader – They make their money by buying the coin in significant quantities before the pump group even comes to being or during a period where there is a charted time difference (where the large buy is no longer visible in the 48-hour charts) in the group. Some admins do votes to choose the coin, in this, they give the appearance of no early buys. However very often the admins and those who have access to the voting information will either buy all of the possible winning options of the coin or they will buy the clear winner before the vote is up.

 

  • Pump Admins – They will buy the coin before the announcement (not a pre-pump, generally not even a blip on the radar). They also make money by charging less savory ICOs for “marketing” to build up their telegram group size. They also make a profit from selling ad space to smaller pump groups.

 

  • Paid and Insider Groups – They make their money from buying in early and hosting their own small pump groups.

 

  • Pump Groups – They generally have a small early and botting percentage that makes money. Often Pump Admins will skew vote results by closing voting early to give the illusion that quite a few people made big money.  Mathematically, someone had to lose, and it can’t always be the people that fear missing out (and bots of course).

 

  • ICOs – Many ICOs grow by thousands of membe1rs when they are advertised on pump groups. However, as all ICOs soon realize, you can’t buy traffic. The pump groups members will often be unruly and cause issues for all of the involved parties.

 

The Racket

There are some darker aspects in the pump and dump groups that a very small number of groups use but have been growing in number.

 

Outside of the regular structures, they run by, they also have some darker elements.

These elements include threatening small to medium sized ICOs with report spamming their telegram groups, advertising the ICO and then demanding payment despite the hardship it causes (it is useful enough that it does turn a profit).

 

A much darker thing that the groups have been used for in recent times is using P&D’s as a pseudo mixer. Some shady pump groups will provide cryptocurrency at a discounted rates to insiders. These coins are generally tainted with some illicit transactions and the clean (in comparison) bitcoin of the insider is enough to add an extra layer of anonymity to the transactions.

 

What do you think? Did I miss anything? Did I get anything wrong? Let me know in the comments below!

Rasikh :