A pump and dump is a type of scam where individuals try to falsely inflate the price (pump) of an owned asset with plans to sell it soon after (dump).

One form of the pump and dump is individuals purchase a cheap stock, and then release misleading positive news or statements about it to encourage people to rush to it and buy it. Once people do (causing a pump in price), they then sell it.

Another form that of this scam is where rich individuals (whales) or groups of individuals suddenly purchase a bunch of a low volume and market cap asset (like an obscure altcoin) all at once. The price could surge 30% in one go. This would then signal to the hordes of retail investors that the asset is pumping, and they should get in now, so they buy it up. The price then shoots up to 3x the original price. The scammers then sell off all their coins and walk away with a big profit. Leaving everyone else high and dry.

These scams are especially bad if they do it with positive news releases as they make the pump seem more realistic.

Pump and dumps are fairly common in the altcoin market, and should be avoided at all costs!