- Scammers are exploiting PumpFun, profiting $50-100k daily while targeting both newbies and experienced traders alike.
- A staggering 98.6% of tokens on PumpFun never make it to Raydium, highlighting the risks involved in trading on this platform.
- To avoid scams, always check engagement on a token’s page and be wary of wallets funded from CEXs or mixers.
Scammers are taking advantage of the euphoria around the escalating memecoin bull cycle according to Jesse Trading. Both experienced traders and frequent users are the targets of a recent scam that makes between $50 and $100,000 each day. The primary platform for this fraudulent activity is PumpFun, a go-to for token launches on the Solana (SOL) blockchain.
Scam Tactics on PumpFun
PumpFun, while popular among memecoin enthusiasts, is becoming a playground for scammers. A 98.6% of tokens launched on the platform never make it to Raydium, a decentralized exchange.
Of the 1.4% that do, many crash to zero shortly after, leaving traders with massive losses. Significantly, even the few tokens that survive can turn out to be rug pulls, where scammers cash out, and unsuspecting investors lose everything.
The scam unfolds systematically. First, a new token is quickly launched on PumpFun and pumped onto Raydium within a few trading candles. Wallets with no prior activity start buying the token, creating the illusion of organic demand. However, these wallets aren’t connected, making the token appear legitimate when checked through blockchain tools like Bubble Maps.
The Pump-and-Dump Process
The token then gains traction, and its promoters buy ad space from key opinion leaders (KOLs). These influencers unknowingly promote the token, driving up its trading volume. The token’s market cap skyrockets, attracting even more traders. Eventually, the scammers dump their holdings, often using hundreds of wallets to evade detection, causing the token’s price to collapse.
Avoiding Scams in the Bull Market
To avoid these scams, traders should watch for warning signs. First, check for comments and engagement on the token’s PumpFun page. Legitimate tokens usually generate buzz, while scams have little to no interaction. Additionally, review the first buyers’ wallets.
Scammers often fund wallets from centralized exchanges (CEXs) or mixers, with their first transaction being the token purchase. Consequently, traders must remain cautious when trading on PumpFun to avoid falling victim to these schemes.
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