Pump-and-Dump Scheme: Spotting and Avoiding Scams in 2025

The digital age has made investing easier than ever for Australians, but it’s also opened the door for sophisticated scams. Among the most notorious are pump-and-dump schemes—a fast-moving, high-risk con that has cost unwary investors millions. With new digital assets and meme stocks capturing headlines, these schemes are evolving rapidly in 2025. Here’s how you can stay ahead of the scammers and safeguard your portfolio.

What Is a Pump-and-Dump Scheme?

At its core, a pump-and-dump is a form of market manipulation where fraudsters artificially inflate (“pump”) the price of an asset, often a low-volume stock or cryptocurrency, through misleading hype. Once prices are sky-high and unsuspecting investors rush in, the scammers sell off (“dump”) their holdings at a profit, leaving everyone else with steep losses as the price collapses.

• Classic setup: Target low-cap shares or little-known digital coins.
• Promotion: Use social media, forums, and even AI-generated news to spread false claims of breakthroughs, buyouts, or imminent surges.
• Exit: Sell quickly as prices spike, then disappear as values plunge.

These scams aren’t new, but in 2025, they’re leveraging encrypted messaging apps, influencer marketing, and deepfake videos to appear more convincing than ever.

Recent Trends: ASIC’s 2025 Crackdown and the Rise of Digital Manipulation

The Australian Securities and Investments Commission (ASIC) has stepped up its efforts against pump-and-dump schemes, issuing record fines and collaborating with global regulators. In early 2025, ASIC targeted Telegram channels and Discord groups orchestrating coordinated trades in ASX-listed microcaps and certain altcoins. Several high-profile influencers are under investigation for allegedly accepting payments to promote dubious tokens.

Some key 2025 developments:

• Real-time monitoring: ASIC now uses AI-driven surveillance to flag suspicious trading patterns within minutes of a price spike.
• Expanded penalties: New legislation allows for asset freezes and criminal charges for both organisers and promoters, including social media personalities.
• Public awareness campaigns: The “Don’t Get Dumped” initiative aims to educate young investors about the hallmarks of a pump-and-dump.

For example, in March 2025, a Sydney-based trading group was fined over $3 million after manipulating a renewable energy penny stock, using viral TikTok videos to lure in hundreds of retail investors. ASIC’s swift intervention helped some investors recover funds, but many were left nursing heavy losses.

How to Spot a Pump-and-Dump in 2025

With scammers becoming savvier, it’s vital to know the red flags:

• Unsolicited tips: Beware of “hot stock” or “moonshot crypto” tips in chat groups or on social media, especially from anonymous or newly created accounts.
• Sudden surges in price and volume: If a little-known asset starts skyrocketing without clear news or fundamentals, be sceptical.
• Pressure to buy fast: Scammers use FOMO tactics, claiming the window to profit is closing quickly.
• Over-the-top hype: Watch for exaggerated promises—”guaranteed 10x returns” or “insider info” are classic hooks.

Always cross-check any claims with official company announcements, ASIC’s investor alerts, and reputable news outlets. If it sounds too good to be true, it almost always is.

Protecting Yourself and Your Money

Staying safe means blending caution with curiosity. Here are practical steps every Aussie investor can take in 2025:

• Stick to regulated exchanges and licensed brokers.
• Research company fundamentals—look for legitimate business activity and audited financials.
• Use tools like ASIC’s MoneySmart website to verify investment opportunities.
• Be wary of investments promoted by social media influencers who don’t disclose conflicts of interest.
• Report suspected scams via ASIC’s online portal—early reporting helps disrupt fraud rings.

Remember, real wealth comes from steady, well-informed investing—not chasing the latest internet frenzy.

The Bottom Line

Pump-and-dump schemes may be getting more sophisticated in 2025, but with vigilance and the right information, you can steer clear of the traps. As ASIC ramps up enforcement and digital literacy spreads, the best defence remains a healthy dose of scepticism and a commitment to research. Don’t let hype dictate your investment decisions—your future self will thank you.