This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. The article 

is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. 

Please consult with your own legal adviser before taking any action based on this information. 

Customer Advisory: Beware Virtual Currency Pump-and-Dump

Schemes 

The U.S. Commodity Futures Trading Commission (CFTC) is advising customers to avoid 

pump-and-dump schemes that can occur in thinly traded or new “alternative” virtual 

currencies and digital coins or tokens. Customers should not purchase virtual 

currencies, digital coins, or tokens based on social media tips or sudden price spikes. 

Thoroughly research virtual currencies, digital coins, tokens, and the companies or 

entities behind them in order to separate hype 

from facts. 

Pump-and-dump schemes have been around long 

before virtual currencies and digital tokens. 

Historically, they were the domain of “boiler room”

frauds that aggressively peddled penny stocks by 

falsely promising the companies were on the verge 

of major breakthroughs, releasing groundbreaking 

products, or merging with blue chip competitors. As 

demand in the thinly traded companies grew, the 

share prices would rise. When the prices reached a 

certain point, the boiler rooms would dump their 

remaining shares on the open market, the prices 

would crash, and investors were left holding nearly 

worthless stock. 

Old Scam, New Technology

The same basic fraud is now occurring using little known virtual currencies and digital coins or 

tokens, but thanks to mobile messaging apps or Internet message boards, today’s pump-anddumpers don’t need a boiler room, they organize anonymously and hype the currencies and 

tokens using social media. 

Some of these pump-and-dump groups and chat rooms contain thousands of members. The 

members subscribe to the group and follow the conversations as they indicate when the next 

pump-and-dump will occur. On the day of the scam, the organizer counts down the buy signal: 

“15 mins left before the pump! Get ready to buy”

“5 minutes till pump, next message will be the coin! Tweet about us and send everyone 

the link to telegram (sic) for outsiders to see what we are pumping so they can get in on 

the action too!! lets (sic) take it to the MOON!!!!!”

Blow the whistle on 

pump-and-dump schemers

Virtual currency and digital token pumpand-dump schemes continue because 

they are mostly anonymous.

If you have original information that 

leads to a successful enforcement 

action that leads to monetary sanctions 

of $1 million or more, you could be 

eligible for a monetary award of 

between 10 percent and 30 percent.

For more information, or to submit a tip, 

visit the CFTC’s whistleblower.gov

website.
This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. The article 

is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. 

Please consult with your own legal adviser before taking any action based on this information. 

The next post announces the coin that will be bid up, followed by the exchange platform where 

the pump will take place. 

Some pump and dumps use false news reports, typically about a famous high-tech business 

leader or investor who plans to pour millions of dollars into a small, lesser known virtual 

currency or coin. Other fake news stories have featured major retailers, banks, or credit card 

companies, announcing plans to partner with one virtual currency or another. Links to the phony 

stories are also accompanied by posts that create false urgency and tell readers to buy now. 

Once the pump begins, it can be over in a matter of minutes. In the example above, the buy 

and sell cycle was over in less than eight minutes. Commonly, it is the people pulling the strings 

who get out first making the most in the scheme, and leaving everyone else scrambling to sell 

before losing their investment. 

These pump and dumps occur in the largely unregulated cash market for virtual currencies and 

digital tokens, and typically on platforms that offer a wide array of coin pairings for traders to buy 

and sell. While the scams have been around as long as the virtual currency markets 

themselves, the number of new virtual currency and digital coin traders has grown substantially, 

increasing the number of potential victims or unwitting perpetrators. 

The CFTC has received complaints from customers who have lost money to pump-and-dump 

schemes. While its regulatory oversight authority over commodity cash markets is limited, the 

CFTC maintains general anti-fraud and manipulation enforcement authority over virtual currency 

cash markets as a commodity in interstate commerce. In addition, some of the coin exchanges 

are taking measures to identify and block accounts that participate in pump-and-dump activities. 

Protect Yourself 

The best protection for customers is to only purchase alternative virtual currencies, digital coins, 

or tokens that have been thoroughly researched. Remember: 

 Don’t purchase digital coins or tokens because of a single tip, especially if it comes over 

social media.

 Don’t believe ads or websites that promise quick wealth by investing in certain digital 

coins or tokens. 

 Do not participate in pump-and-dump trades; market manipulation is against the law and 

many participants end up losing money. 

 There is no such thing as a guaranteed investment or trading strategy. If someone tells 

you there is no risk of losing money, do not invest. 

If you believe you may have been the victim of fraud, or to report suspicious activity, contact us 

at 866.366.2382 or visit CFTC.gov/TipOrComplaint.