A New Wolf in Town? Pump-and-Dump Manipulation in Cryptocurrency Markets*

【Author】 Dhawan, Anirudh; Putnins, Talis J.

【Source】REVIEW OF FINANCE

【影响因子】5.059

【Abstract】We investigate the puzzle of widespread participation in cryptocurrency pump-and-dump manipulation schemes. Unlike stock market manipulators, cryptocurrency manipulators openly declare their intentions to pump specific coins, rather than trying to deceive investors. Puzzlingly, people join in despite negative expected returns. In a simple framework, we demonstrate how overconfidence and gambling preferences can explain participation in these schemes. Analyzing a sample of 355 cases in 6 months, we find strong empirical support for both mechanisms. Pumps generate extreme price distortions of 65% on average, abnormal trading volumes in the millions of dollars, and large wealth transfers between participants.

【Keywords】Market manipulation; Pump-and-dump; Cryptocurrencies; Overconfidence; Gambling

【发表时间】

【收录时间】2022-09-06

【文献类型】实证数据

【主题类别】

区块链治理-市场治理-数字货币