To the moon: defining and detecting cryptocurrency pump-and-dumps
Abstract Pump-and-dump schemes are fraudulent price manipulations through the spread of misinformation and have been around in economic settings since at least the 1700s. With new technologies around cryptocurrency trading, the problem has intensified to a shorter time scale and broader scope. The s...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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BMC
2018-11-01
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| Series: | Crime Science |
| Subjects: | |
| Online Access: | http://link.springer.com/article/10.1186/s40163-018-0093-5 |
| _version_ | 1818060366025850880 |
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| author | Josh Kamps Bennett Kleinberg |
| author_facet | Josh Kamps Bennett Kleinberg |
| author_sort | Josh Kamps |
| collection | DOAJ |
| description | Abstract Pump-and-dump schemes are fraudulent price manipulations through the spread of misinformation and have been around in economic settings since at least the 1700s. With new technologies around cryptocurrency trading, the problem has intensified to a shorter time scale and broader scope. The scientific literature on cryptocurrency pump-and-dump schemes is scarce, and government regulation has not yet caught up, leaving cryptocurrencies particularly vulnerable to this type of market manipulation. This paper examines existing information on pump-and-dump schemes from classical economic literature, synthesises this with cryptocurrencies, and proposes criteria that can be used to define a cryptocurrency pump-and-dump. These pump-and-dump patterns exhibit anomalous behaviour; thus, techniques from anomaly detection research are utilised to locate points of anomalous trading activity in order to flag potential pump-and-dump activity. The findings suggest that there are some signals in the trading data that might help detect pump-and-dump schemes, and we demonstrate these in our detection system by examining several real-world cases. Moreover, we found that fraudulent activity clusters on specific cryptocurrency exchanges and coins. The approach, data, and findings of this paper might form a basis for further research into this emerging fraud problem and could ultimately inform crime prevention. |
| first_indexed | 2024-12-10T13:31:16Z |
| format | Article |
| id | doaj.art-4832ec694f404c1c8567492153997689 |
| institution | Directory Open Access Journal |
| issn | 2193-7680 |
| language | English |
| last_indexed | 2024-12-10T13:31:16Z |
| publishDate | 2018-11-01 |
| publisher | BMC |
| record_format | Article |
| series | Crime Science |
| spelling | doaj.art-4832ec694f404c1c85674921539976892022-12-22T01:46:58ZengBMCCrime Science2193-76802018-11-017111810.1186/s40163-018-0093-5To the moon: defining and detecting cryptocurrency pump-and-dumpsJosh Kamps0Bennett Kleinberg1Department of Computer Science, VU University AmsterdamDawes Centre for Future Crime, Department of Security and Crime Science, University College LondonAbstract Pump-and-dump schemes are fraudulent price manipulations through the spread of misinformation and have been around in economic settings since at least the 1700s. With new technologies around cryptocurrency trading, the problem has intensified to a shorter time scale and broader scope. The scientific literature on cryptocurrency pump-and-dump schemes is scarce, and government regulation has not yet caught up, leaving cryptocurrencies particularly vulnerable to this type of market manipulation. This paper examines existing information on pump-and-dump schemes from classical economic literature, synthesises this with cryptocurrencies, and proposes criteria that can be used to define a cryptocurrency pump-and-dump. These pump-and-dump patterns exhibit anomalous behaviour; thus, techniques from anomaly detection research are utilised to locate points of anomalous trading activity in order to flag potential pump-and-dump activity. The findings suggest that there are some signals in the trading data that might help detect pump-and-dump schemes, and we demonstrate these in our detection system by examining several real-world cases. Moreover, we found that fraudulent activity clusters on specific cryptocurrency exchanges and coins. The approach, data, and findings of this paper might form a basis for further research into this emerging fraud problem and could ultimately inform crime prevention.http://link.springer.com/article/10.1186/s40163-018-0093-5CryptocurrenciesFraudPump-and-dumpAnomaly detection |
| spellingShingle | Josh Kamps Bennett Kleinberg To the moon: defining and detecting cryptocurrency pump-and-dumps Crime Science Cryptocurrencies Fraud Pump-and-dump Anomaly detection |
| title | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| title_full | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| title_fullStr | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| title_full_unstemmed | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| title_short | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| title_sort | to the moon defining and detecting cryptocurrency pump and dumps |
| topic | Cryptocurrencies Fraud Pump-and-dump Anomaly detection |
| url | http://link.springer.com/article/10.1186/s40163-018-0093-5 |
| work_keys_str_mv | AT joshkamps tothemoondefininganddetectingcryptocurrencypumpanddumps AT bennettkleinberg tothemoondefininganddetectingcryptocurrencypumpanddumps |