Understanding the risk of pump schemes and landfill in the Crypto currency
The world of crypto currency has been shouting in recent years, with many new users who have entered the market on a daily basis. Although the CRIPTO currency offer a high degree of liquidity and flexibility, they are not risks. One of the most significant threats to investors is the pump and landfill scheme.
What is pump scheme and landfill?
The pumping scheme and landfill is a type of securities fraud that involves artificial inflatable inflatable CRIPTO currency or other financial instrument by spreading false information about its value, which makes it more precious than it actually. The scheme is based on a group of individuals to artificially inflate the price with coordinated marketing, false news or other means.
How do the landfill pump and scheme?
Pump schemes and landfills generally follow this procedure:
- Initial offer of coins (ICO) : the company creates a new crypto currency and starts ICO to raise funds from investors.
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- Price inflation
: As more investors are bought in token, its price begins to increase rapidly, making it more precious than it really is.
- False news : False articles or posts that support pump scheme and landfills have been created, further inflating the price.
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Risks associated with pump samples and landfills
Although the CRIPTO currency are generally considered to be low -risk investment, pumping and landfill samples may include significant risks. Here are some potential consequences:
* Loss of Fund : Investors buying pumps and landfills can lose the overall investment if they are sold at a priced price.
* Loss of confidence in the Crypto Currency : A sudden loss of value can lead to the investors lose confidence in the crypto currency, making them abandon or yarn to other investments.
* Regular problems : pump schemes and landfills often study regulatory bodies that can see them as a fraud on securities. This may include fines, penalties or even arrest scheme.
Examples of famous pumps and landfills
Several pumps and high profile landfills have been exposed over the years. An exceptional example is the fraud of investment in the Kripto currency of Bitconnect of $ 1 billion, in which a group of people created false and post -social media news to promote its crypto currency, Bitconnect.
Another example is the 2017 ICO scandal, which includes the Bitconnect, Coinccheck and CEO of Bitconnect, Kyubey Nakamura. The scheme included the spread of false data on the value of these crypto currencies, artificially inflating prices before taking them to loss.
How to protect you from pump samples and landfills
To protect you from pumping schemes and landfills:
* Search : Before you invest in any crypto currency, you thoroughly look for a project and understand its technology, teams and markets below.
* Check the information : Watch out for articles or posts of false news. Check the data via reliable sources before sharing them with others.
* Diversify your portfolio : Dissemin your investments in multiple CRIPTO currency to reduce your risk.
* Follow regulatory activity : Stay updated about regulatory development relating to the CRIPTO Currency Sector.
Conclusion
Crypto currency is high risk investment, and pump samples and landfills are just one of many potential risks. By understanding these schemes and taking measures to protect you, you can make informed decisions about your investment and reduce risk exposure.
