Pump and dump schemes have existed in stock markets for a century. Crypto made them faster, cheaper to run, harder to prosecute, and significantly more accessible to the average person — who can now be targeted by an influencer they trust.
The scheme: a promoter quietly buys a large amount of a low-cap token, then uses their platform to hype it. Followers buy in, driving up the price. The promoter sells into the rising price. The price collapses. Followers hold worthless tokens.
This is often illegal — the FTC has charged multiple crypto influencers with undisclosed paid promotions — but prosecution is slow and recovery is rare. Kim Kardashian paid $1.26M to settle SEC charges for promoting a token without disclosing her payment. The followers who bought it lost far more.
The giveaway scam variation: a verified-looking account (or deepfake video) of Elon Musk, MrBeast, or a major brand announces a crypto giveaway — send 0.1 ETH and receive 0.2 ETH back. They never send anything back. These scams generate millions per month.
Rule of thumb: if a financial opportunity is being promoted to you by someone who would benefit from your participation, assume their incentives don't align with yours. This is always true in finance, and doubly true in unregulated crypto markets.