Practically one in 4 new crypto tokens that launched in 2022 had on-chain attributes that resembled pump-and-dump scams, in line with Chainalysis.
The blockchain knowledge platform notes in a brand new evaluation that whereas 1.1 million tokens have been launched on the Ethereum (ETH) and BNB chains final yr, solely 40,521 of these tokens had “a minimal of ten swaps and 4 consecutive days of buying and selling within the week following their launch.”
Chainalysis examined the cohort of recent tasks that “had an affect on the crypto ecosystem” and analyzed which of them misplaced no less than 90% of their worth of their first week of buying and selling, which suggests the token creators dumped their holdings shortly.
“Of the 40,521 tokens launched in 2022 that gained enough traction to be value analyzing, 9,902, or 24%, noticed a value decline within the first week indicative of attainable pump-and-dump exercise.”
Chainalysis acknowledges that it’s attainable that market forces and/or natural infrastructure challenges sunk a few of these tasks, moderately than deliberate scheming.
“Whereas it’s not possible to know the promotional technique or intentions behind all 9,902 tokens, we did verify the 25 with the most important first-week value drop on Token Sniffer, a service that scores new tokens on a scale of zero to 100 primarily based on their trustworthiness and docks factors for any scam-like traits. In keeping with Token Sniffer, these 25 tokens all scored zero, indicating that, in line with Token Sniffer’s analysis standards, they have been nearly definitely designed for a pump and dump.”
The Token Sniffer service additionally famous that lots of the tasks had “honeypot” code that stopped new patrons from promoting off their tokens.
Patrons that Chainalysis believes weren’t related to the token creators spent a complete of $4.6 billion value of crypto accumulating the suspected pump-and-dump altcoins final yr. The blockchain knowledge agency estimates that the pump-and-dump fraudsters made off with $30 million in earnings.
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