Kamps, J;
Kleinberg, B;
(2018)
To the moon: defining and detecting cryptocurrency pump-and-dumps.
Crime Science
, 7
, Article 18. 10.1186/s40163-018-0093-5.
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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.
| Type: | Article |
|---|---|
| Title: | To the moon: defining and detecting cryptocurrency pump-and-dumps |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1186/s40163-018-0093-5 |
| Publisher version: | https://doi.org/10.1186/s40163-018-0093-5 |
| Language: | English |
| Additional information: | This work is licensed under a Creative Commons Attribution 4.0 International License. The images or other third party material in this article are included in the article’s Creative Commons license, unless indicated otherwise in the credit line; if the material is not included under the Creative Commons license, users will need to obtain permission from the license holder to reproduce the material. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/ |
| Keywords: | Cryptocurrencies, Fraud, Pump-and-dump, Anomaly detection |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Security and Crime Science |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10069142 |
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