Saturday 05 April 2025
The cryptocurrency market has long been plagued by pump-and-dump schemes, where individuals artificially inflate the price of a coin only to sell it at a profit when the bubble bursts. These fraudulent activities have led to significant financial losses for investors and undermined trust in the market as a whole.
Researchers have developed various methods to detect these manipulative tactics, but most focus on analyzing transaction data or social media signals. However, these approaches often fail to capture the complex dynamics between different entities involved in the scheme.
A new study has shed light on this issue by identifying the masterminds behind pump-and-dump schemes and their characteristics. The researchers built a detection system called PERSEUS, which collects real-time data from online social networks (OSNs) and cryptocurrency markets.
PERSEUS constructs temporal attributed graphs that preserve the direction of information diffusion and community structure among spreaders. By analyzing these graphs using graph neural networks, the system can identify masterminds and their accomplices with high accuracy.
The study found that masterminds are entities that orchestrate pump-and-dump schemes, often using social media platforms to spread false information and manipulate public opinion. These individuals dominate the flow of information and coordinate activities among accomplices, who then amplify the message through their own networks.
PERSEUS detected 438 masterminds responsible for pump-and-dump activities during a six-month period from February 16th to October 9th in 2024. The system’s ability to identify these individuals has significant implications for regulatory bodies, which can now target specific entities and prevent further fraudulent activities.
The study also highlights the importance of analyzing OSN data, as it provides valuable insights into the interactions between masterminds and accomplices. By understanding how information spreads through these networks, researchers can develop more effective methods to detect and prevent pump-and-dump schemes.
In addition to its practical applications, this research has significant theoretical implications for the field of network science. The study demonstrates that graph neural networks can be used to analyze complex social dynamics and identify key players in information diffusion processes.
The findings have far-reaching consequences for the cryptocurrency market and online communities as a whole. By developing more sophisticated methods to detect pump-and-dump schemes, regulators can promote transparency and trust in the market. This, in turn, will benefit investors and contribute to the long-term stability of the digital asset ecosystem.
Cite this article: “Unveiling the Masterminds Behind Cryptocurrency Pump-and-Dump Schemes: A Graph Neural Network Approach”, The Science Archive, 2025.
Cryptocurrency, Pump-And-Dump Schemes, Perseus, Social Networks, Graph Neural Networks, Information Diffusion, Masterminds, Accomplices, Network Science, Online Communities
