A report from Chainalysis ‘analyzed all tokens launched’ in 2022 on the BNB and Ethereum blockchains and found just over 9,900 bore characteristics of a ‘pump and dump’ scheme

Crypto currency investors moved $4.6bln into crypto tokens suspected to be part of ‘pump and dump’ schemes in 2022.

A February 16 report from blockchain analytics company Chainalysis ‘analyzed all tokens launched’ during the last year on the BNB and Ethereum blockchains and found just more than 9,900 bore attributes of a ‘pump and dump’ scheme.

A pump-and-dump scheme usually involves the creators setting up a campaign of deceptive statements, hype, and Fear Of Missing Out (FOMO) to convince investors into buying tokens while secretly selling their stake in the scheme at higher prices.

The blockchain analytics firm estimated investors spent $4.6bln worth of crypto purchasing the approximately over 9,900 different suspected fake tokens it identified.

The most prolific purported pump and dump creator found by Chainalysis — who was not named — is suspected of launching 264 such tokens single handedly in 2022, with the company saying: Teams launching new projects and tokens can stay anonymous, which makes it possible for repeat law breakers to execute several pump and dump schemes.

The blockchain analytics firm termed a token as being ‘worth analyzing’ as a likely ‘pump and dump’ if it had at least 10 swaps and four back-to-back days of trading on decentralized exchanges (DEXs) during the week following its launch. Of the 1.1mln new tokens launched in 2022, just more than 40,500 fit the criteria.

If a token from this group saw a price drop of 90 per cent or more during the first week Chainalysis considered it likely the token was a ‘pump and dump.’ The company found that 24 per cent of the 40,500 tokens analyzed fit the secondary criterion.

Chainalysis estimated that just 445 individuals or groups are behind the suspected pump-and-dump tokens — suggesting creators frequently launch multiple projects — and made $30mln in total profits from selling their holdings.

It is possible, of course, that in a few cases, teams involved with token launches did their best to form a healthy offering, and the ensuing drop in cost was simply because of market forces, the company further said.