An anti-dumping policy in the cryptocurrency sphere refers to proactive measures implemented by project developers, communities, or exchanges to thwart financial fraud, particularly pump-and-dump schemes. These schemes involve scammers inflating the price of a cryptocurrency through coordinated buying, only to sell off their holdings at a profit, causing significant losses for other investors when the price subsequently plummets. The goal of anti-dumping policies is to counteract such scams and protect investors from exploitation.

In the context of cryptocurrency, anti-dumping measures differ from traditional government-led initiatives aimed at shielding domestic industries from the adverse effects of foreign imports. While government anti-dumping measures typically involve imposing tariffs on imported goods to support domestic producers and preserve the local economy, anti-dumping policies in crypto focus on maintaining market integrity and investor confidence by curbing fraudulent activities.

A pump-and-dump scheme in crypto occurs when an organized entity or group artificially inflates the price of a cryptocurrency token, often through the dissemination of misleading information and coordinated buying efforts. Unsuspecting investors, drawn in by the artificially created hype, purchase the token at inflated prices, only to suffer losses when the orchestrators of the scheme sell off their holdings, causing a rapid price collapse.

Anti-dumping policies in crypto aim to protect investors by imposing restrictions or penalties on activities that facilitate token dumping or market manipulation. These policies may include limitations on the volume of tokens that can be bought or sold in a single transaction, the imposition of value or price caps, or the implementation of vesting periods to prevent token flooding and premature profit-taking by project founders or initial investors.

To avoid falling victim to pump-and-dump schemes, investors are advised to exercise due diligence and select projects that demonstrate transparency and genuine value creation. They should be cautious of projects that promise quick riches and scrutinize project founders and documentation for signs of legitimacy.

Remaining vigilant, avoiding FOMO-driven investments, ensuring projects undergo comprehensive smart contract auditing, and considering the Lindy effect to evaluate the longevity and potential profitability of cryptocurrency projects are additional strategies that investors can employ to mitigate risks associated with fraudulent activities in the crypto market.