After the California Gold Rush, in 1870, two Kentucky swindlers whipped up a scheme to prey on thirsty financiers’ FOMO. They invented a diamond field out West. Investors sunk millions in today’s money into the scheme. All of it, of course, was for naught—a cautionary tale about believing anyone who claims they have a surefire plan to get rich quick.

A hundred and fifty years later, a new generation of amateur investors is equally desperate not to miss the next big thing in the finance world. After watching the great GameStop stock boom play out on sites like Reddit and Discord this winter, hundreds of thousands of hopefuls are joining Discord groups that promise big earnings from manipulating the crypto market—also known as crypto pump-and-dumps. Step 1: Buy in early, when the coin is low. Step 2: convince other people to join you—the more, the merrier, the bigger the potential gains as the price of the coin goes up. Step 3: Sell out before the price tanks. Get the timing right, these groups promise, and you come out a winner (and richer). Losers are left holding the bag.

Crypto pumps have been on the rise for a few years now, thanks in part to the relative ease of making and marketing a new digital coin. In 2018, The Wall Street Journal identified 175 “pump” initiatives, moving over $825 million through 121 different crypto coins, most of them organized on Discord and Telegram. Since then, experts say, it’s only gotten bigger. Trade volume on cryptocurrency exchanges is surging, particularly with lesser-known coins that have no fundamental value outside of investing.

Originally a gaming-centric chat app, Discord has lately developed a strong culture of finance-centric servers. The app attracted tons of attention for its role in the WallStreetBets campaign to boost GameStop this January, when the meme stock rocketed from $20 to $347 in a matter of days. Later analysis attributed much of the spike to huge firms, rather than retail investors, but the spirit of the thing got people thinking: if they were in the right Discord server at the right time, maybe they could earn a buck. WallStreetBets users turned to Dogecoin next. They thought it would be funny, a good meme, to pump up the outdated and irrelevant cryptocurrency. And it worked. Doge spiked from $0.008 in late January to $0.68 on Wednesday.

According to moderators on four pump servers, a crop of new servers and social media “pump” accounts sprang up around the same time, with at least a dozen ripping off WallStreetBets’ name or logo. These accounts are not associated with the WallStreetBets subreddit or official Discord, according to a WallStreetBets moderator. (WallStreetBets only recently allowed discussions around crypto, but they are limited to Bitcoin, Ethereum, and Doge.) They are, however, cashing in on the WallStreetBets hype, advertising target gains of up to 500 percent. One of the servers has 83,000 members.

“Many young adults and others all of a sudden became extremely interested in stocks and investing, and this later also gave the crypto community and the cryptocurrencies a huge boost in popularity,” says one Discord user who goes by Alejandro. Alejandro was invited to his first crypto pump server in early February, during the GameStop hype. After making what he calls “a good profit,” 170 percent of his initial investment, Alejandro created his own group, FairPlay Crypto Pumps. It now has 10,500 members, who tune in every couple of days for a new “pump signal,” a server-wide message announcing which coin they’re pumping when. The gains, he says, comes from people who are not in the Discord. “This principle is called FOMO (fear of missing out),” he says. “Once outsiders see a sudden rise in an unexpected coin, they will buy shares. Meanwhile, the members of my group will sell their shares to the outsiders for a good chunk of profit.”

Discord is a perfect vehicle for these pumps, as a semi-public forum that allows users to advertise servers broadly, ping users about coordinated buy-ins, and discuss strategy. I’m a longtime Discord user, and anecdotally I’ve seen an enormous uptick in activity. Between early April and May, I received 47 invitations to join crypto pump groups over Discord. Eight of the groups have more than 20,000 members; the largest has over 80,000. Several of these servers’ moderators say they pay people—whom they call “advertisers”—to spam Discord users with invitations, sometimes including crypto giveaways.

New members are greeted with FAQs describing 2,000 percent pumps and the potential for hundreds or thousands in gains. That’s not necessarily the reality. “The Discord server is a casino. As the saying goes, ‘The house always wins,’ and they’re the house,” says Thomas Hurley, 21, a member of several crypto pump Discord servers. After crypto evangelists began joining his gaming servers to advertise pump groups, he tried his hand at a couple coordinated price pushes. He never made much profit, but other people did. When Hurley began looking closer at some of these coins’ market trading pages on sites like Binance, he noticed some interesting patterns.

“A few seconds before they announced which coin to pump, there would be a huge spike,” he says. It looked like someone in the know bought up a lot of the coin beforehand, hugely boosting their potential to earn big by selling early. Hurley never had a chance.

He isn’t alone. A 2018 study of Telegram-based pump groups found that five minutes before the pump signal (before the coin is even revealed), a designated coin’s price shot up about 5 percent. Back then, on average, only investors who bought in within the first 20 seconds after a pump could make a profit. Today, sources say, crypto pumps move so quickly that enthusiasts commission bots to buy and sell coins based on Discord announcements. The owner of one server, Pump It Up, says he lost several hundred dollars because he wasn’t using a bot, which can buy and sell within milliseconds. The experience prompted him to make his own group back in February.

“Crypto pumps prey on less-informed people in the space,” says Josh Kamps, a PhD candidate at University College London studying crypto fraud. People who found out about GameStop late want to jump on the next big thing. Kamps noticed, anecdotally, that a bunch of low-utility alt-coins cropped up right around then, which he says are “pretty much designed to be pumped.” For example, he says, pump groups are flocking to Shiba Inu Coin (or SHIB). One knock-off WallStreetBets pump group advertises that they pumped SHIB for more than 4 times profit. In the last 24 hours, the meme coin saw over $6.1 billion in trading volume.

“Discord welcomes a broad variety of personal finance discussions, including cryptocurrency, investment clubs, and day traders and encourages creative uses of our platform, as long as nothing compromises our values or amounts to illegal activity,” a Discord spokesperson said in an email to WIRED. They cautioned Discord users to carefully research advice they receive on the Internet.

Crypto pump schemes fall into a gray legal area. “There’s a lot of debate about whether we see cryptocurrencies as securities or not,” says Donghwa Shin, a professor at the University of North Carolina at Chapel Hill who coauthored the 2018 study. Pump-and-dumps are illegal for securities but not for cryptocurrencies. “That’s why there’s no clear regulation,” he says. Shin thinks it’s time for that to change. According to his research, these currencies’ liquidity and value increase in crypto exchanges where pump-and-dumps are banned. Not only does the market get better, it would be more challenging for the tiny fraction of people organizing these pumps—the people who most consistently make money off them—to take advantage of others.

“Unfairness exists in these markets. The winners in these markets are the insiders. All others are losers. In order to protect them, we have to regulate this market,” says Shin.

The US Commodity Futures Trading Commission warned consumers in 2018 to avoid virtual currency pump-and-dump schemes but also stated that it had limited authority over those markets. Earlier this year, however, federal prosecutors charged businessman John McAfee and an associate in connection to several pump-and-dump initiatives involving digital coins. The US alleges that between late 2017 and 2018, McAfee advertised a “coin of the day” on his Twitter account without disclosing to his million followers that the men had bought up the coin beforehand and would sell it when the price spiked. The CFTC heralded the case as its first-ever enforcement action for “a manipulative scheme involving digital assets.”

The current crypto rush is also inspiring more traditional forms of fraud. Last week, one group, WallStreetBets – Crypto Pumps, pulled off a $2 million scam, Bloomberg estimates, when it told its 340,000 Telegram subscribers it would be pumping its own coin, WSBFinance. The coin didn’t exist yet; it was allegedly a presale. Users sent money to a crypto wallet believing they would receive the WSBFinance coin. But there were never any coins.

“Sorry guys! Our bot had a small problem,” the account wrote to its Telegram members. Then, after a delay: “Buying lambo now.”

This story originally appeared on wired.com.

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