Analyzing Target-Based Cryptocurrency Pump and Dump Schemes

J. T. Hamrick, Farhang Rouhi, Arghya Mukherjee, Marie Vasek, Tyler Moore, Neil Gandal

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

1 Scopus citations

Abstract

As the number of cryptocurrencies has exploded in recent years, so too has the fraud. One popular strategy is when actors promote coordinated purchases of coins in hopes of temporarily driving up prices. Prior work investigating such pump and dump schemes has focused on the immediate impact to prices following pump signals, which were largely interpreted as following the same strategy. The reality, as with most cybercrimes, is that the operators of the schemes try out a much more heterogeneous mix of tactics. From a population of 12,252 pump signals observed between July 2017 and January 2019, we identify and examine 3,683 so-called target-based pump signals that announce promoted coins alongside buy and sell targets, but without a coordinated purchase time. We develop a strategy to measure the success of target pumps over longer time horizons. We find that around half of these pumps reach at least one of their sell targets, and that reaching their peak price often takes days, as opposed to the seconds or minutes required in pumps studied previously. We also examine the various groups promoting coins and present evidence that groups try a variety of distinct strategies and experience varying success. We find that the most successful groups promote many coins and issue many pumps, but not for the same coins. As decentralized finance becomes more popular, a deeper understanding of price manipulation techniques like target pumps is needed to combat fraud.

Original languageEnglish
Title of host publicationDeFi 2021 - Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security, co-located with CCS 2021
PublisherAssociation for Computing Machinery, Inc
Pages21-27
Number of pages7
ISBN (Electronic)9781450385404
DOIs
StatePublished - 19 Nov 2021
Event2021 ACM CCS Workshop on Decentralized Finance and Security, DeFi 2021, co-located with CCS 2021 - Virtual, Online, Korea, Republic of
Duration: 19 Nov 2021 → …

Publication series

NameDeFi 2021 - Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security, co-located with CCS 2021

Conference

Conference2021 ACM CCS Workshop on Decentralized Finance and Security, DeFi 2021, co-located with CCS 2021
Country/TerritoryKorea, Republic of
CityVirtual, Online
Period19/11/21 → …

Funding

FundersFunder number
Sapir Center for Development
National Science Foundation
Directorate for Computer and Information Science and Engineering1714291
Intel Corporation
United States-Israel Binational Science Foundation2016622
Tel Aviv University

    Keywords

    • cryptocurrencies
    • cybercrime measurement
    • pump-and-dump schemes

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