Web3 Pump-and-Dumps Exploit Anonymity; $25M Seized in Crackdown

- Regulators intensify crackdowns on pump-and-dump schemes in decentralized markets. - "Operation Token Mirrors" leads to $25 million seizure, 18 arrests. Pump-and-dump schemes continue to plague the cryptocurrency industry, capitalizing on the decentralized and often underregulated Web3 ecosystem. On August 4, 2025, Cointelegraph reported how orchestrators manipulate crypto token prices through coordinated efforts, misinformation, and market hype. These tactics cause significant losses for unsuspecting investors while the orchestrators reap massive gains. These schemes typically follow a four-stage process. First, in the pre-launch phase, orchestrators build anticipation for a token through social media and influencer campaigns. The launch phase then uses promotional activities to attract investors, leading to the pump phase, where fabricated news and false narratives inflate the token's value. Finally, the dump phase occurs when operators offload their holdings en masse, which collapses the token’s value and leaves investors with substantial losses. The crypto market's decentralized and anonymous nature allows these schemes to thrive, as privacy-focused platforms like Telegram make it easy for scammers to coordinate. In addition, platforms such as Pump.fun simplify token creation, registering over 1 million new tokens in 2024 alone. The Cointelegraph report highlights that orchestrators can generate profits exceeding 2,000% in some cases. According to research from the University of Bristol, scammers manipulated some tokens multiple times, targeting one token 98 times over four years. In response, regulators are stepping up their efforts to curb these fraudulent practices. The FBI’s "Operation Token Mirrors," launched in October 2024, is a significant example. During this operation, the FBI created a fake cryptocurrency, NexFundAI, to expose market manipulation by specifically targeting practices like “wash trading,” where entities create a false appearance of high trading volume. As a result, the operation led to the seizure of $25 million and charges against 18 individuals. Authorities implicated firms like Gotbit, ZM Quant, CLS Global, and MyTrade in the deceptive activities. The Cointelegraph report also advises investors on how to reduce their risks. Investors should be cautious of unsolicited investment advice and promises of unrealistic returns on social media, while also watching for emerging techniques like deepfakes used to promote fraudulent projects. Thoroughly researching a project's legitimacy and its founder's credibility can offer additional protection, and diversifying investments helps to mitigate risk. As of August 4, 20:08 UTC, Pump.fun (PUMP) is trading at $0.003, with a 5.121% decrease in 24-hour trading volume, according to the latest market data.