Understanding the impact of pump and dump schemes on Ripple (XRP)
The cryptocurrency world has experienced a significant increase in popularity over the years, with many investors flowing on platforms such as Bitcoin, Ethereum and others. However, this influx of new users has not been without challenges. One of the most pressing concerns is the increase in pumps and dump schemes, which it is known to manipulate market prices, artificially increasing the value of cryptocurrencies.
What are the pump and dump schemes?
Pump and landfill schemes are an online fraud that includes misleading investors to buy cryptocurrency while waiting for an inflated price. The main purpose of this scam is to create a false sense of urgency, persuading investors to buy cryptocurrency at the lowest possible price, thus increasing its value.
The term “pump” refers to the artificial increase in the price of cryptocurrency, distributing positive information on it on online communities and social media platforms. This can be done using a variety of means, such as fake tweets, news in Reddit forums or even creating and sharing false articles. The idea is that the increasing number of investors will increase demand for cryptocurrency, thus increasing its value.
The effect of pump and dump schemes on Ripple (XRP)
Ripple, the leading cryptocurrency platform, has been particularly vulnerable to pumping and discharge schemes in recent years. Here are some of the effects that these scams have been on the XRP:
- Revaluation : The most important effect of pump and dump schemes on XRP is the revaluation. This scams artificially increases the price of the XRP, making it more attractive to new investors and further promoting its popularity.
- Investor Loss : Pump and landfill schemes can cause investor confidence in Ripple technology, which has a far -reaching impact on the company’s ability to grow and maintain its market share.
3
Reduced liquidity : Artificial price inflation caused by this scam can also lead to reduced liquidity in the XRP market. This makes it difficult for the purchase or sale of legal investors to cryptocurrency, further exacerbating the problem of pump and discharge schemes.
- Regulatory Test : Pumps and dump schemes are often related to regulatory issues because they involve market prices manipulation in order to avoid compliance with money laundering (AML) and knowledge of the Customer (KYC) rules.
Examples of XRP -related pumps and dump schemes
There are several cases of pump and dump schemes focused on the Ripple brand and price. For example:
1
Ripple Labs own 2018 Hack : In July 2018, a hacker group gained access to the Ripple network, causing a decline in cryptocurrency value by more than 50%.
- XRP Daily Coin Review (YDRV) : August 2020 Online Publication called XRP Daily Coin Review (YDRV) published false and misleading information about XRP, artificially increasing its price.
3
“Ripple Effect” scheme : A younger example is related to a group of persons advertising with an XRP -related coin called “Ripple Effect”, which was later discovered as a pump and dump scheme.
Protect yourself from the pump and dump
In order to avoid this victim of fraud, investors should take caution when investing in cryptocurrencies. Here are some tips:
1
Do careful research : Before investing in any cryptocurrency, study its technology, teams and market trends.
- Maintain informed about regulatory changes
: Be aware of the regulatory updates related to the cryptocurrency you choose.
3
Diverse your portfolio : Spread investment in several cryptocurrencies to reduce risk.
- Use reputable exchange : Invest only through created and reputable exchange.