Pump and dump scams—once the domain of penny stocks and shady brokers—are making a comeback in Australia’s fast-moving digital finance world. With the rise of social media trading groups and crypto tokens, these schemes are evolving, catching out even seasoned investors. If you’re investing in shares, crypto, or hot new tokens in 2025, understanding how these scams work is essential to keeping your money safe.
What Is a Pump and Dump Scam?
At its core, a pump and dump scam is a form of market manipulation. Fraudsters artificially inflate (“pump”) the price of a financial asset, usually a low-volume stock or a cryptocurrency, through misleading or false information. Once the price soars and unsuspecting investors pile in, the scammers quickly sell off (“dump”) their holdings, causing the price to collapse and leaving latecomers nursing heavy losses.
- Pump: A coordinated effort to generate hype—often via social media, chat forums, or influencer endorsements.
- Dump: The orchestrators sell their shares or tokens at the peak, triggering a price crash.
- Victims: Regular investors, drawn in by the fear of missing out (FOMO), are left with near-worthless assets.
In 2025, ASIC (Australian Securities and Investments Commission) has flagged a surge in social media-driven pump and dumps, especially in the microcap stock and meme coin space.
How Pump and Dump Scams Are Thriving in 2025
Several trends have converged to make these scams more prevalent—and harder to spot—this year:
- Social Media & Messaging Apps: Platforms like Telegram, WhatsApp, and even TikTok are being used to coordinate pump campaigns, often under the guise of ‘investment clubs’ or ‘exclusive tips’.
- Crypto & DeFi Tokens: The explosion of new cryptocurrencies and decentralised finance (DeFi) tokens provides scammers with a steady supply of easy-to-manipulate assets. ASIC’s recent 2025 update specifically warns about ‘rug pulls’ and pump and dump activity in newly listed tokens.
- FOMO Culture: With stories of overnight millionaires and viral meme coins, the fear of missing out remains a powerful psychological lever.
Case in point: In early 2025, the “AussieBucks” token soared 800% in a single day after coordinated posts on X (formerly Twitter) and Discord channels. ASIC is now investigating after dozens of retail investors reported six-figure losses when the price crashed within hours.
Spotting the Red Flags: Protect Your Portfolio
Staying alert to classic and emerging warning signs is your best defence. Here’s what to watch for in 2025:
- Unsolicited Tips: Beware of “hot stock” or “must-buy” crypto recommendations from strangers online or in group chats.
- Sudden Price Spikes: Rapid, unexplained increases in price—especially with low trading volumes—are a hallmark of manipulation.
- Social Media Hype: Heavy promotion by anonymous accounts, or influencers with little track record in financial advice, is a red flag.
- Pressure to Act Fast: Scammers push urgency: “Buy now before it’s too late!”
- Lack of Transparency: Vague or unverifiable claims about partnerships, technology, or celebrity involvement.
ASIC’s 2025 investor education campaign urges Australians to double-check sources, seek independent analysis, and avoid investment decisions based solely on social media chatter.
What To Do If You Suspect a Pump and Dump
- Don’t Buy In: If something feels off, trust your instincts and steer clear.
- Report Suspicious Activity: Use ASIC’s online reporting tool if you spot potential scams or market manipulation.
- Review Your Portfolio: Regularly check your investments for unexplained volatility, and consider setting stop-loss orders to limit potential losses.
- Educate Friends & Family: Share warnings, especially with newer investors who may be more susceptible to slick online promotions.
Remember: genuine investment opportunities don’t require secrecy, urgency, or hype. If it sounds too good to be true, it almost always is.
