Approximately one-quarter, or 24%, of cryptocurrency tokens launched in 2022 showed indications of being involved in pump-and-dump fraud, according to Chainalysis.

This type of fraud, which is prevalent in traditional finance, is executed when scammers promote stocks they own to other investors, causing the price to skyrocket.

At a specific point, the fraudsters sell their overpriced shares for a profit, causing the price to collapse.

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Chainalysis indicated that this is mainly due to the ease with which bad actors can launch a new token and manipulate its value by controlling the initial trade volume and circulating supply to establish an artificially high price and market capitalization for it.

According to the blockchain analysis firm, the majority of the 1.1 million tokens launched in the previous year on the Ethereum (CRYPTO: ETH) and BNB (CRYPTO: BNB) blockchains saw little to no activity after launch.

Of the 40,521 tokens that did gain traction, 9902, or 24%, saw a 90% price decrease within a week after launch, indicating their involvement in pump-and-dump schemes.

Chainalysis also discovered that the same fraudsters were responsible for multiple scams in the previous year.

The most active individual launched 264 suspect tokens in 2022.

"We estimate that the creators of these tokens made a total of $30m in profits from selling off their holdings before the tokens’ value plummeted," the report stated.

Chainalysis found that 445 individuals or groups accounted for 24% of the 9,902 suspected pump and dump tokens launched in 2022.

Despite the fact that the amount of cryptocurrency used in purchasing these tokens is insignificant when compared to the trillions of dollars in crypto transactions in the previous year, the report states that it still causes substantial damage to unsuspecting investors.

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