- Fraudsters pose as reputable companies to steal your private keys and login details through fake emails and malicious websites
- Developers withdraw all liquidity from a DeFi project, leaving investors with worthless tokens. Be cautious of projects with anonymous founders and vague whitepapers
- Scammers use AI to automate scams, including fake tokens and pump-and-dump schemes. Always verify the legitimacy of AI-powered services and new token offerings
The crypto space is ever-changing, with equally aggressive scammers on the lookout for gullible investors. To this end, the FBI recently reported that, in 2023, cryptocurrency fraud had risen to an all-time high of $5.6 billion as scammers foisted their schemes on victims with greater intensity.
Here there are five of the most common crypto scams to look out for in 2024:
Phishing Scams
Crypto phishing fraudsters can impersonate any well-acknowledged company or exchange and ask users for their private keys or access information. They will send you by email or by message, a dangerous link you shoudnl’t open.
Pay close attention to the URL, do not open any unsolicited emails, and do not give away your private keys..
Rug Pulls
In a rug pull, the creators withdraw all the liquidity from a DeFi project, leaving investors with worthless tokens. Many of these scams involve significant noise in marketing by developers who gain investor confidence and then make off with the funds.
How to protect yourself: Be wary of projects whose founders are anonymous and those whose whitepapers or token models seem vague and prone to benefiting insiders.
Ponzi Schemes
A Ponzi scheme is one in which returns to earlier investors are paid with the money of new investors. Since a Ponzi scheme pays returns to existing investors using money from new investors, it can never sustain itself without a constant influx of new participants. Originally, these schemes are difficult to detect because scammers promise very high returns and make guarantees.
How to protect yourself: Be wary of projects promising abnormally high returns with no risks or those that are less transparent about their investment strategies.
Scams Impersonating Celebrities
Scammers impersonate famous celebrities, like Elon Musk and even Prince Harry, to market their crypto projects. This even extends to deepfake videos where the celebrity appears to be promoting a scam.
How to protect yourself: Always check endorsements through official channels. Be suspicious of any investment opportunities that use the name, likeness, or endorsement of a celebrity.
Crypto AI Scams
Scammers are now using AI to automate scams, from chatbots impersonating advisors and hawking phony tokens to AI-controlled pump-and-dump schemes, in which interest in a project is faked to make it appear more popular than it actually is.
How to protect yourself: Always do your due diligence on any AI-powered service offering you trust and remain suspicious of online activities hyping new token offerings.
Conclusion
Being aware of such scams will go a long way in safeguarding you and your assets within the crypto ecosystem. As these scams become increasingly sophisticated, it is critical to stay informed and be cautious with every crypto project investment.
We at Bitcoinsensus have prepared a guide to help avoid these scams. Read it and share it, especially if you have family members who may be less prepared and are among those most exposed to these risks.
