Amid Pump & Dump Boom, The Bancor Protocol Helps Tokens Fight Back

Last month, organizers of a Telegram chat group sent a message encouraging their 79,000 members to collectively buy a cryptocurrency that had yet to be named: “Next pump will be in 6 hours and 27 minutes. Let’s make this a pump we will never forget!” Hours later, another message (“2 minutes left!”), then an image revealing the name of the token, GVT, or Genesis Vision, a platform for crypto-traders. Within seconds, GVT’s price surged 133 percent on the cryptocurrency exchange Binance, where it sat for a few minutes, before crashing back down to pre-pump price levels. “Congratulations to the ones that got profit,” the organizers wrote, “Next pump will be scheduled soon!”
Welcome to the wild world of cryptocurrency pump and dumps, where insiders artificially inflate the value of tokens in orchestrated attempts to quickly profit at the expense of other token holders — and the tokens themselves.

The phenomenon introduces price volatility and uncertainty into fledgling token markets, posing a threat to a token’s usability and adoption. Yet recent innovations in the token economy have the capacity to create arbitrage opportunities that choke artificial pumps and minimize volatility in the face of these now rampant manipulation attempts. While bad actors are able to create the illusion of organic growth in traditional and decentralized exchanges, in this new model, tokens can inherently counteract inauthentic trading aimed at fleecing buyers.
In recent months, pump and dump groups have proliferated on messaging apps like Telegram and Discord. Organizers attract thousands of members through promotions and by spamming join links with promises of steep, low-risk returns in a matter of minutes. Members receive instructions from organizers ahead of a pump including the specific token being targeted, the exchange where the participants should buy the token, the exact time a pump will occur and the “target” price at which members should try to dump the token.
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