A tool for tracking the coordination of pump-and-dump crypto coin schemes

A team of computer scientists and financial specialists at University College London has developed a tool to track the coordination efforts of pump-and-dump crypto coin scheme manipulators. They have published a paper on the arXiv preprint server describing their tool called Perseus, its purpose and how it works.

Cryptocurrencies are still in their infancy and are unregulated, which means there are few rules regarding how they can and cannot be used. It also means investing in them is still a risky business.

In this new study, the researchers suggest that there are fewer than 500 major players, who they describe as masterminds, working to game the system for profit. These masterminds, the researchers contend, have developed what have come to be known as pump-and-dump schemes, in which they hype a coin to get people to buy and then sell their own coins when they believe the buying has reached a saturation point, walking away with a substantial profit.

The researchers point out that much of the buying and selling going on with crypto coins is run in conjunction with a messaging system called Telegram, where the hyping is conducted. On the app, chats are used to communicate between potential buyers and sellers.

To learn more about what is happening in the crypto markets, the research team built a system capable of reading messages sent between buyers and sellers on Telegram and analyzed them. They found that in addition to masterminds, there are also what the team describes as accomplices—the people who spread the messages posted by the masterminds, thereby allowing hype to build.

With Perseus, the research team detected 438 masterminds, who are together responsible for about $3.2 trillion in artificial crypto coin trading, and are collectively raking in approximately $250 million a year.

In reading some of the messages sent between users on Telegram, the researchers noted that the ease with which the masterminds were able to carry out their schemes should be of concern to those attempting to make money off crypto coin investing. They also suggest that at some point, some form of regulation is going to be needed to keep the system running, because eventually, those being scammed will catch on and the whole system will collapse.

© 2025 Science X Network