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Scammers are always on the lookout for new ways to steal cryptocurrencies from unsuspecting users through scams, phishing, or hacks. They particularly favor the crypto industry due to its decentralized nature, where no one person or entity owns, manages, or controls the network.
Most of us are likely overconfident about our risk of being ripped off, but all it takes is a convincing email, or a fake lookalike decentralized app requesting access to your wallet, or a dubious browser extension capturing your keystrokes, and — boom — your money or crypto is gone.
In order to safeguard their assets, crypto investors need to know the different types of crypto scams. In this article, we explain the top 10 most common crypto scams in 2024.
Key Takeaways
- AI sits at the top of our list, as now scammers can ply their trade en masse with personalized yet scalable attacks
- On social media, bad actors mimic brands or impersonate celebrities to promote fraudulent crypto schemes.
- Romance scams also ply on emotions to trick individuals into sending crypto payments or investing in fake projects.
- Investment scams see the promise of high returns on new crypto projects, often using fake websites and unsolicited offers to lure victims into investing.
The 10 Most Common Crypto Scams of 2024
10. AI Crypto Scams
The exponential rise of artificial intelligence (AI) has also allowed scammers to develop new methods of fraud and deception. Scammers may use AI chatbots or virtual assistants to engage with individuals, provide investment advice, promote fake tokens and initial coin offerings (ICO), or offer fake high-yield investment opportunities.
The use of AI can also challenge social proof-of-work, which assumes that crypto projects with greater and more loyal followings online must be legitimate. With AI making it easier for projects to scam people, users must exercise caution and due diligence prior to investing in a project.
Furthermore, by leveraging social media platforms and AI-generated content, scammers can orchestrate elaborate pump-and-dump schemes, artificially inflating the value of tokens and selling off their holdings for significant profits. The technology can also allow scammers to automate and scale fraudulent activities.
However, it is worth noting that AI can also be used to combat online scams. For instance, researchers at San Diego State University have developed an AI system to detect and expose cryptocurrency giveaway scams on Twitter.
9. Social Media Crypto Scams
One of the most widely-used forms of crypto scams involves social media platforms. In these scams, bad actors use social media platforms to mimic famous brands or impersonate celebrities and promote their fraudulent schemes.
Twitter, Instagram, and TikTok are three popular destinations for such scams. While these platforms have already taken measures to combat crypto scams, they are still rife with bot scams promoting fake cryptocurrency projects.
Back in June 2023, the European Consumer Organization (BEUC) even released a report accusing social media platforms of enabling scams related to digital assets (PDF). In the 20-page report, the watchdog emphasized that social media platforms like Instagram and TikTok maintain loose policies, which allow scammers to target unsuspecting teenagers.
The good thing – it is pretty easy to protect against social media crypto scams. Users simply need to be extra careful when interacting with crypto projects trending on social media, making sure that they are not falling victim to fake accounts.
8. Fake Celebrity Endorsements
Scammers can misuse high-profile figures without their knowledge to coax fans, using their faces to promote fake endorsement schemes related to crypto projects. Among the notable personalities unwittingly involved in such scams are Prince Harry and Meghan Markle, Bill Gates, Mark Zuckerberg, and Sir Richard Branson.
One of the trickiest fake celebrity endorsement scams was a deep fake of Elon Musk promoting a crypto scam project. In the video, the fake Musk says he is launching a new crypto project, and participants can earn a 30% return on their investment in three months.
To safeguard yourself against fake celebrity endorsements, users need to conduct comprehensive research before engaging with any cryptocurrency project or investment opportunity. They need to verify the legitimacy of the project, its team members, and any endorsements associated with it.
7. Romance Scams
Cryptocurrency romance scams are another particularly deceptive scheme that has become increasingly popular among scammers. In these scams, bad actors establish romantic connections with unsuspecting individuals with the ultimate goal of tricking them into handing over their valuable crypto assets.
These fraudulent relationships often start on social media platforms or dating apps, where initial conversations are initiated. Patiently playing the long game, these scammers invest days, weeks, and sometimes even months in cultivating an emotional bond with their targets.
Leveraging the fabricated romantic connection, the criminals try to manipulate their victims to either send them crypto payments or invest in a fake crypto project. They may claim that they have personally invested in the fake project and raked in substantial profits.
After receiving the payment, the scammers may choose to prolong the charade in an attempt to extract further funds. Alternatively, they may abruptly end the relationship and vanish.
6. Investment Scams
Investment scams involve promises of massive returns in exchange for early investment in a relatively new crypto project. The scammers can assume different roles, such as investment managers, of the yet-to-be-launched project and make ill-founded promises about delivering huge returns.
These scams often begin with an unsolicited offer, typically to become a cryptocurrency investor, that lures users to a fraudulent website to learn more about the opportunity. The website, which might seem pretty legitimate, would then encourage users to begin investing and make money quickly.
In order to protect against these scams, users need to exercise caution when receiving unsolicited investment opportunities or promotional offers via email, social media, or other communication channels.
Legitimate investment opportunities are rarely presented through unsolicited means.
5. Fake Exchanges
Another common crypto and Bitcoin scam is the use of fake crypto exchanges, apps, wallets, or other platforms to steal user funds. In these scams, fraudsters sometimes create fake websites that typically have domain names that are extremely similar to the ones they are trying to imitate, making it tough to tell them apart.
These websites act normally during initial interactions and might even let users withdraw a small amount of money. However, as they increase their investments, the website might shut down or deny withdrawal requests for meaningless reasons.
To protect against fake crypto platforms, users need to double-check the website’s domain name for misspellings or variations that may indicate a fraudulent entity. They can also check if the exchange is listed on reputable regulatory websites or has any certifications or memberships with industry organizations.
You can also try out Bitcoin scammer lists such as the state of California’s DFPI site, which keeps a list of known Bitcoin scam websites.
4. Ponzi Schemes
Crypto Ponzi schemes are fraudulent investment schemes in which early investors are paid returns using funds from new investors rather than from legitimate profits or investments. The scheme collapses when there are not enough new investors to sustain the payouts, resulting in substantial financial losses for participants.
It is worth noting that it is not always an easy task to identify crypto Ponzi schemes. For instance, the now-defunct crypto project Terra (LUNA) is considered a major Ponzi scheme. However, before the project’s collapse last year, even some of the most prominent investing firms were backing it.
Still, users can look for red flags in a project to determine whether it is a Ponzi scheme. Some of the more common red flags in these scams include promises of high and guaranteed returns, a lack of transparency about the underlying investment strategy, pressure to recruit new investors, and a focus on referral bonuses or multilevel marketing structures.
3. Giveaway Scams
Giveaway scams are when fraudsters guarantee to match or multiply the amount of crypto sent to them. These scams aim to deceive individuals into sending their funds to the scammers, resulting in financial losses.
Almost all crypto giveaway scams follow a similar pattern: They pretend to be a prominent individual or organization before asking unsuspecting users to send crypto to them. Since crypto transactions are irreversible, once crypto is sent to a “giveaway” address, it is gone forever.
Educating yourself and being able to identify this type of crypto scam is the best way to protect yourself. It is important to remember that legitimate giveaways or promotions rarely require you to send funds or personal information in advance.
2. Rug Pulls
In crypto, rug pulls refer to fraudulent activities where developers or individuals associated with a project abruptly and intentionally drain the liquidity or funds from a decentralized finance (DeFi) project, leaving investors with worthless or significantly devalued tokens.
Rug pulls often occur in projects that are built on blockchains like Ethereum (ETH), where smart contracts govern the project’s operations. The scammers first create a seemingly legitimate project, attract investors, and encourage them to invest their funds or purchase tokens.
However, once a significant amount of funds or liquidity has been accumulated, the scammers exploit vulnerabilities in the smart contract to drain the funds. The vulnerabilities are usually present from the start but hidden within all the codes.
There are some common characteristics of rug pulls that can help you identify these scams and avoid falling victim. For one, rug pull projects often lack transparency regarding the identity of the developers or team members. They may use pseudonyms or provide limited information about their backgrounds.
Furthermore, scammers may use false or exaggerated claims about the project’s potential, partnerships, or future developments to attract investors. Rug pull projects may also have tokenomics that heavily favor developers or early investors.
1. Phishing Scams
Phishing is a popular form of online scam that targets users by sending them an email that appears to be from an established organization, such as a bank, a mortgage company, or a major company. The primary goal of these scams is to steal user data, including login credentials and credit card numbers.
While phishing scams are prevalent across the Internet, these scams have also become widespread in crypto. Scammers may try to target crypto users to discover their wallet’s private keys, which can grant anyone access to the funds stored in that wallet.
To execute a phishing scheme, scammers send emails with links to fake websites and request holders to enter their private keys. Once they have this information, they can steal the cryptocurrency.
To protect against phishing scams, users need to be extra careful when receiving unsolicited emails, messages, or communications, especially if they ask for personal information or contain urgent requests.
Users should also avoid clicking on links embedded in emails or messages unless they are certain of their legitimacy.
The Bottom Line
With the increasing adoption of cryptocurrencies, there has also been a surge in the type and quantity of scams related to this market. Common cryptocurrency scams can range from rug pulls and giveaway scams to more traditional scams like Ponzi schemes and phishing scams.
While each crypto scam has a different rulebook, they all aim to deceive unsuspecting investors and steal their funds. Therefore, crypto users need to take a proactive approach and adhere to security measures.
