The Cryptocurrency "Pump-and-Dump": Social Media and Legal and Ethical Ambiguity

Purpose
Cryptocurrency markets have become increasingly intertwined with social media, creating new opportunities for manipulation and misinformation. This chapter examines the cryptocurrency “pump-and-dump” phenomenon through the author’s personal experience as a participant-observer in crypto-trading groups organized on Reddit and Discord.

Design/methodology/approach
Using an autoethnographic and descriptive approach, the chapter documents the structure, communication practices, and behavioral norms of cryptocurrency pump-and-dump groups. The analysis is situated within broader discussions of cryptocurrency marketplaces, online social networking, and speculative investing cultures.

Findings
The chapter shows how pump-and-dump groups leverage social media platforms to disseminate positive misinformation about targeted cryptocurrencies, artificially inflate prices, and extract short-term profits. Following the rapid rise in Bitcoin prices and the WallStreetBets/GameStop events of late 2020 and early 2021, these groups capitalized on heightened public interest in “get rich quick” cryptocurrency investing. New and inexperienced investors were particularly vulnerable to these coordinated disinformation campaigns, frequently sustaining financial losses while group organizers profited.

Originality/value
By combining first-hand experience with analysis of cryptocurrency market dynamics and social media behavior, this chapter provides insight into the social, economic, and ethical implications of cryptocurrency pump-and-dump schemes. The findings contribute to understanding how misinformation, online communities, and speculative enthusiasm shape participation and risk in contemporary cryptocurrency markets.