Nearly a Quarter of New Crypto Tokens Launched in 2022 Resembled Pump-and-Dump Schemes: Chainalysis

Nearly one in four new crypto tokens that launched in 2022 had on-chain attributes that resembled pump-and-dump scams, according to Chainalysis.

The blockchain data platform notes in a new analysis that while 1.1 million tokens were launched on the Ethereum (ETH) and BNB chains last year, only 40,521 of those tokens had “a minimum of ten swaps and four consecutive days of trading in the week following their launch.”

Chainalysis examined the cohort of new projects that “had an impact on the crypto ecosystem” and analyzed which ones lost at least 90% of their value in their first week of trading, which suggests the token creators dumped their holdings quickly.

“Of the 40,521 tokens launched in 2022 that gained sufficient traction to be worth analyzing, 9,902, or 24%, saw a price decline in the first week indicative of possible pump-and-dump activity.”

Chainalysis acknowledges that it’s possible that market forces and/or organic infrastructure challenges sunk some of these projects, rather than deliberate scheming.

“While it’s impossible to know the promotional strategy or intentions behind all 9,902 tokens, we did check the 25 with the biggest first-week price drop on Token Sniffer, a service that scores new tokens on a scale of zero to 100 based on their trustworthiness and docks points for any scam-like characteristics. According to Token Sniffer, those 25 tokens all scored zero, indicating that, according to Token Sniffer’s evaluation criteria, they were almost certainly designed for a pump and dump.”

The Token Sniffer service also noted that many of the projects had “honeypot” code that stopped new buyers from selling off their tokens.

Buyers that Chainalysis believes weren’t associated with the token creators spent a total of $4.6 billion worth of crypto accumulating the suspected pump-and-dump altcoins last year. The blockchain data firm estimates that the pump-and-dump fraudsters made off with $30 million in profits.

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