Analyzing Target-Based Cryptocurrency Pump and Dump Schemes

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Analyzing Target-Based Cryptocurrency Pump and Dump Schemes

Hamrick, JT; Rouhi, F; Mukherjee, A; Vasek, M; Moore, T; Gandal, N; (2021) Analyzing Target-Based Cryptocurrency Pump and Dump Schemes. In: DeFi '21: Proceedings of the 2021 ACM CCS Workshop on Decentralized Finance and Security. (pp. pp. 21-27). Association for Computing Machinery: New York, NY, USA. Green open access

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Abstract

As the number of cryptocurrencies has exploded in recent years, so too has the fraud. One popular strategy is when actors promote coordinated purchases of coins in hopes of temporarily driving up prices. Prior work investigating such pump and dump schemes has focused on the immediate impact to prices following pump signals, which were largely interpreted as following the same strategy. The reality, as with most cybercrimes, is that the operators of the schemes try out a much more heterogeneous mix of tactics. From a population of 12,252 pump signals observed between July 2017 and January 2019, we identify and examine 3,683 so-called target-based pump signals that announce promoted coins alongside buy and sell targets, but without a coordinated purchase time. We develop a strategy to measure the success of target pumps over longer time horizons. We find that around half of these pumps reach at least one of their sell targets, and that reaching their peak price often takes days, as opposed to the seconds or minutes required in pumps studied previously. We also examine the various groups promoting coins and present evidence that groups try a variety of distinct strategies and experience varying success. We find that the most successful groups promote many coins and issue many pumps, but not for the same coins. As decentralized finance becomes more popular, a deeper understanding of price manipulation techniques like target pumps is needed to combat fraud.

Type:	Proceedings paper
Title:	Analyzing Target-Based Cryptocurrency Pump and Dump Schemes
Event:	CCS '21: 2021 ACM SIGSAC Conference on Computer and Communications Security
Open access status:	An open access version is available from UCL Discovery
DOI:	10.1145/3464967.3488591
Publisher version:	https://doi.org/10.1145/3464967.3488591
Language:	English
Additional information:	This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords:	cybercrime measurement, pump-and-dump schemes, cryptocurrencies, price manipulation, social networks,
UCL classification:	UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Computer Science
URI:	https://discovery.ucl.ac.uk/id/eprint/10139158