The Anatomy Of Cryptocurrency Pump-and-dump Scheme

The anatomy of cryptocurrency pump-and-dump scheme

Title: The Anatomy of a Cryptocurrency Pump-and-Dump Scheme

Authors:Jiahua Xu, Benjamin Livshits

(Submitted on 25 Nov 2018 (v1), last revised 17 Aug 2019 (this version, v2))

Abstract: While pump-and-dump schemes have attracted the attention of cryptocurrency observers and regulators alike, this paper represents the first detailed empirical query of pump-and-dump activities in cryptocurrency markets.

The anatomy of cryptocurrency pump-and-dump scheme

We present a case study of a recent pump-and-dump event, investigate 412 pump-and-dump activities organized in Telegram channels from June 17, 2018 to February 26, 2019, and discover patterns in crypto-markets associated with pump-and-dump schemes. We then build a model that predicts the pump likelihood of all coins listed in a crypto-exchange prior to a pump. The model exhibits high precision as well as robustness, and can be used to create a simple, yet very effective trading strategy, which we empirically demonstrate can generate a return as high as 60% on small retail investments within a span of two and half months.

USENIX Security '19 - The Anatomy of a Cryptocurrency Pump-and-Dump Scheme

The study provides a proof of concept for strategic crypto-trading and sheds light on the application of machine learning for crime detection.

Submission history

From: Jiahua Xu [view email]
[v1] Sun, 25 Nov 2018 22:09:26 GMT (2086kb,D)
[v2] Sat, 17 Aug 2019 16:13:55 GMT (3404kb,D)

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The anatomy of cryptocurrency pump-and-dump scheme