What is a pump and dump in crypto? How it works and how to spot one
A pump and dump is when a group buys a token early, pushes the price up with hype (paid calls, group chats, fake volume) and sells into the people who arrive late. Warning signs: a few wallets holding most of the supply, bundled buys at launch, many calls within minutes from accounts that never call the same coin twice, and volume that disappears after the peak.
How it works
- Accumulate: insiders buy cheaply, often in the same block as the launch (bundles and snipers).
- Pump: they create attention: paid influencer posts, Telegram "alpha" groups, bots that trade back and forth to fake volume.
- Dump: new buyers push the price up; the insiders sell into them. The chart drops faster than it rose.
Unlike a rug pull, the liquidity usually stays; the token just goes back to near nothing because the only real demand was the hype.
What our data shows
Heavily bundled tokens do pump more often (25.5% reached 2x when over 20% of the supply was bundled, against 3.6% under 2%), which is exactly what attracts late buyers. But the fall from the top is the deepest:
Show as table
| Value | Note | |
|---|---|---|
| 2-10% bundled | 17% | |
| 10-20% | 35% | |
| Over 20% | 54% | insiders sell into the pump |
Snipers show the same pattern: where snipers took more than 30% of the supply, the median fall from the top was 58%.
And many simultaneous influencer calls are not always organic: groups of three or more KOL calls within 15 minutes reached 2x 59% of the time versus 33% otherwise, but some groups are the same people posting from several accounts. That is why we cluster influencers (how influencer clustering works) and exclude bot accounts.
Warning signs
- Top 10 wallets hold more than about 35% of the supply, or the developer wallet holds more than 5%.
- Many buys in the first block from wallets funded by the same source.
- A burst of posts from accounts that appear only for this coin.
- "Last chance" urgency, countdowns, guaranteed targets.
- Volume and holders that collapse a few hours after the peak.
Every coin in our top 100 has an automatic check of these numbers, for example is WIF safe?
Is it illegal?
In the EU, MiCA explicitly bans market manipulation in crypto-assets, including spreading misleading information to move a price. Enforcement on anonymous on-chain projects is hard, so in practice protecting yourself is your job: small size, a clear exit, and no buying because a chat says "now".
Compare tools: Best rug checkers
MemeSonar does this for you in real time: every new Solana token, every influencer call and every tracked wallet, scored and filtered for rugs.
Request accessNot financial advice. Numbers are measurements of past tokens and calls; meme coins are extremely risky and most go to zero.