Researchers Use Machine Learning to Find Crypto Pump & Dumps Before They Happen

Justine Pope
  • Researchers in the United Kingdom used machine learning to find pump and dump scams in the cryptocurrency market.
  • By looking for unusual buying activity, the algorithm was able to identify five coins that pumped over 100%.

Researchers from the United Kingdom have decided to study one of cryptocurrency’s worst diseases: the pump and dump scam. Now that there are almost 2,000 cryptocurrencies on the market, scammers have a plethora of options for choosing targets for pumping and dumping.

To fight back, these researchers set out to determine how pump and dumps work, and see if they could identify them before they begin. Jiahua Xu and Benjamin Livshits from the Imperial College London wrote a paper called, “The Anatomy of a Cryptocurrency Pump-and-Dump Scheme.” Inside this paper, they use machine learning to try to identify pump and dump scams before they happen.

A pump and dump scam is a form of insider trading. Pump and dumps have existed across all markets, but due to cryptocurrency’s low liquidity and easy access, this market has become ripe for scams. Things got so bad that earlier this year, the US Commodity Futures Trading Commission (CFTC) issued a warning about cryptocurrency pump and dumps, and even offered bounties for pump and dump organizers.

Earlier this year, CryptoGlobe revealedsocial media influencers were organizing cryptocurrency pump and dump schemes. These were reported to the SEC and the FBI by the community after being exposed by a Steemit user.

To learn about pump and dumps, the researchers studied previous pump and dumps to find trends. “Xu and Livshits say that on average there are two pump-and-dump scams every day and that these generate about $7 million worth of trading volume a month.”

After collecting data, the research team found that unusual buying volume frequently appeared before the pump, indicating the the organizers were buying. So, the team built a machine learning algorithm that would find unusual buying volume, believing that the volume would lead to a pump.

They put their algorithm to the test - and it worked. The program identified six cryptocurrencies that were about to pump. Of those six, five of them went up over 100%, and one did not see much growth. Five out of six is an excellent hit rate, so the experiment was a definite success.

How Pump And Dumps WorK

Here’s how a pump and dump is accomplished. First, the organizers select a little-known cryptocurrency. The smaller the better, because larger coins will take more money to move the market. Little coins (with less volume) can be manipulated with ease.

Next, the organizers slowly accumulate the coin of choice, so that they can make sure they have a position before the masses. They then alert their followers of the date and time of the pump, so they can all be ready. Once the time comes, the organizers announce the coin that will be pumped, and usually include a pump target.

Then the pump happens, and the price skyrockets as speculators dive in trying to ride the wave. Usually, price ends the pump with a dump, where it returns back to its starting point, leaving some traders holding the bag. The entire cycle is over within minutes.

To learn more, click here to read a summary of the paper from MIT Technology Review, or click here to read the entire research paper.

Coinbase Delivers Raft of Improvements, Including ETA On Crypto Transfers

Colin Muller
  • Coinbase adds instant top-up
  • And ETA on crypto transfers

Top-rated cryptocurrency exchange Coinbase has activated two improvements to its platform: unified sending-top-ups and crypto transfer ETAs (estimated time of arrival). The improvements are detailed in a blog post, in addition to the recently-added transaction-batching which significantly reduces transaction fees.

Top Up With Sending

This small time-saving feature kicks in when a user is trying to send some crypto but does not have enough of it in its wallet. The new mechanic will automatically purchase the amount of crypto the user want sto send with your funding source, and complete the operation.

This top up feature makes sure to avoid any hangups by only drawing on instant-payment options that the user has already set up.


One of the implications of a publicly verified and operated blockchain is that, the experience is rather more dynamic than what we might find from a centralized service. Hashrates and difficulty levels on Bitcoin’s, and other networks change depending on what is happening in their ecosystems—and all of this affects transfer times.

Now when sending crypto, Coinbase will take these factors into account to estimate how long it will take for the transaction to complete.

In an official blog post, Coinbase recently argued that between Bitcoin and gold—while similar—Bitcoin is the better option as a “safe haven asset” than more traditional gold.

They argue that, while supply of physical precious metals (as opposed to paper trading of them) has become choked in recent weeks and months since the COVID-19 pandemic hit, anyone can still get their hands on “physical” bitcoin by storing it in a private wallet.

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