Are crypto pumps and dumps illegal?
Like the stock market, crypto trading is fraught with misconduct. One such misconduct is the boom and bust.
There is no clear answer to the question of whether cryptocurrency pump and dumps are illegal. That's because cryptocurrencies themselves are a legal gray area. In fact, crypto trading is largely based on the fear of missing out. Trading patterns are intentionally generated when interest groups inject large amounts of money into a particular currency to attract investors.
To their dismay, pump generators always manage to create false hype. Once they did, investors (mostly beginners) flocked to it, which eventually led to a massive surge in price. Pump generators dump their fortunes when they happen and grab profits by creating fake hype.
What exactly is pumping and dumping?
The concept of pumping and dumping is not new. It's been around for a while. In the context of cryptocurrencies, a manipulative act by someone to inflate the price of a particular currency. It doesn't stop there. It also generates false signals containing highly exaggerated market insights to attract more investors. Once the hype leads to high cryptocurrency prices, pump generators withdraw funds at high prices.
Are pumping and dumping illegal?
While pump and dumps are illegal for stocks, they are not illegal for cryptocurrencies. However, this practice is unethical as it is based on lies and deceit.
The only reason cryptocurrency pump and dumps are not illegal is the lack of legislation by regulators. Once encryption becomes more mainstream, the practice is likely to become illegal
How do you protect yourself from Crypto Pumps and Dumps?
Only self-control can save you from cryptocurrency pump and dumps. These plans rely entirely on creating the fear of missing out. The sooner you recognize this, the better it will be for you in the long run.
As a beginner, it can be difficult to grasp market insights at first. Although it seems that everyone has become rich from scratch just by investing in Bitcoin. However, this is far from the truth.
You have to do your homework before investing. In the crypto market, beginners have a relatively high probability of being scammed. The market is not properly regulated and anyone with a good understanding of coding can generate tokens and coins.
The Bottom Line.
The chances of getting rich from cryptocurrency trading are equally low and high. The prospect of success depends entirely on the suitability of the investor. If you're someone who doesn't do research and is vulnerable, crypto trading is the last thing you want to think about. But if you're the one who reads the room before placing your bets, then cryptocurrencies can take you from scratch to wealth