Pump-and-dump schemes in the Web3 ecosystem involve manipulating cryptocurrency prices through coordinated buying and misleading information, enticing investors to buy before orchestrators sell off their holdings and leave the tokens nearly worthless. The relative anonymity in the decentralized market and the absence of stringent regulatory oversight contribute to the prevalence of these schemes. Typically, a pump-and-dump occurs in four stages: pre-launch, launch, pump, and dump. During pre-launch, hype is built around new tokens, and at launch, promotional activities often include influencers to attract investors. The pump occurs as deceptive news circulates, driving demand and inflating prices. Finally, orchestrators sell off before prices crash, leaving others holding devalued tokens. To protect against such scams, investors should avoid unsolicited advice, be wary of social media promotions potentially using deepfakes of celebrities, and conduct their own research to verify claims. Diversifying investments can also mitigate risks associated with potential market manipulations.

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