FOMO is real, and it could be the reason for the newest scam involving crypto, influencers and pump and dumps. Firstly, a pump and dump is when an investor — or group of investors — promotes an investment they own. Then, once the stock price goes up following the surge in interest, they sell it. This is illegal to do in the stock market, but since crypto is unregulated, it’s fair game.
When crypto first became a thing, the people who bought and traded it were knowledgeable in code, blockchain and finance. Now, crypto is a growing market, and as it expands, more and more people enter with less and less knowledge of what they’re investing in. As stories of crypto millionaires come out and big names support the space, people are dying to get in, which is where FOMO enters. They missed the first wave of profit, and they don’t want to miss the next. So, that’s where the scammers come in and the pump and dumps commence.
Joke Crypto: Real or BS?
We all know that Dogecoin started as a joke but is getting real-world attention now. That’s because billionaires such as Elon Musk and Mark Cuban claim to see real potential in the coin as a currency. But people are using this opportunity to jump on the bandwagon and create other joke coins in hopes that the masses will buy in.
So, what’s the problem? Well, for one, how are naive young people supposed to know if a coin is a joke or for real? Secondly, it’s as easy as the click of a button to create a coin these days. In fact, a TikToker created a coin literally called “scamcoin” to make fun of all of the altcoins out there. And people bought in, giving it a $2.5 million market cap despite the creator’s complete lack of knowledge and insistence that it wasn’t real. Coin makers are leaning into the joke coin to get people to buy in for fun, and investors are falling for it, just in case it becomes the next Doge.
Influencers promoting scams
Now, I don’t want to blame Dogecoin. In fact, despite starting as a joke, the people behind the Shiba Inu coin claim to be working with Elon Musk to make it viable. So, at this point, Musk is the end-all-be-all for Dogecoin. So, what is the third and final piece of the scam puzzle? Influencers.
Creators of these coins are using influencers to promote them, pumping the price up like crazy. Then, the price falls out of nowhere. Why? Because the original investors took their profits and dumped them. YouTuber Cody Ko explained in a recent video that he had received several messages asking him to endorse a coin for money — not even asking him to invest or even look into it, just endorse it. He didn’t accept the offers and even created a video explaining how problematic it is that his peers are taking the opportunity to make a quick buck endorsing a coin that could be a pump and dump scam.
Targeting a young audience
Most of the people who follow these influencers are really young and looking for a way to make money fast, so it’s easy for them to fall prey. And these young people wouldn’t be the only victims; we all could be. If you do the research, crypto could be a great option for decentralized currency in the future, but if people flood the market with scams, it will never be taken seriously. So, the only solution is to do your research. Understand the crypto space before you invest, and understand the coin you’re interested in before buying in.