The possibility of token price manipulation in the virtual currency market is being raised. It was analyzed that more than half of the ERC-20 tokens released last year were likely used for market manipulation. ERC-20 refers to a token created on the Ethereum network. Chainalysis reported that of the more than 370,000 tokens launched on Ethereum, approximately 170,000 have been listed on decentralized exchanges (DEXs). The results of this analysis are contained in the 2024 Virtual Asset Crime Report.

The report noted that as the number of token launches increases, the potential for market manipulation increases. In addition, it was revealed that situations where market manipulation is suspected are occurring, especially for tokens with insufficient liquidity after launch. The report claims that new tokens are being launched in a saturated market, which may allow some to manipulate the market price using a pump-and-dump method.

Pump and dump refers to a method in which an individual or group invests in a specific token on a large scale, induces the price to rise, makes a profit, and then sells the tokens held. This is being pointed out as an act of manipulating market prices and making personal profits. In addition, to confirm this, we check whether a user who has no traces of trading with the largest holder of a specific token has purchased the token more than 5 times, the largest holder of the token withdraws more than 70% of tokens from the DeFi pool, and the liquid asset is checked. It was revealed that the verification process was conducted by setting criteria such as finding tokens worth less than $300.

Chainalysis reported that approximately 90,000 ERC-20 tokens were confirmed to be subject to the pump-and-dump scheme. This corresponds to approximately 24% of all tokens and approximately 54% of tokens listed on decentralized exchanges. The report analyzed that the profits gained from these activities were not significant, and explained that while malicious actors can reap profits, most tokens are either low-profitability or not heavily traded. This emphasized the need for more related measures and monitoring.