Last year, almost $2 billion was lost in crypto. The very decentralized nature and irreversible transactions of cryptocurrencies expose the landscape to significant vulnerabilities. Retrieving funds post-crypto scam becomes an insurmountable challenge, necessitating vigilance, early detection and cautious engagement as paramount defenses. Here are the top 10 things you need to know about crypto scams in 2024.
As market rises, more scams appear
Crypto scams correlate with market trends. In bullish markets, unqualified traders rush in, while scams generate less revenue during declines. Overall, crypto scamming and hacking revenue have been steadily declining since 2021, but scammers get more inventive.
Pump-and-dump is here to stay
Market sentiment drives pump-and-dump scams. Scammers inflate a new crypto’s price through hype, enticing investors to later sell and profit. In 2022, 24% of new tokens were pump-and-dump schemes, illustrating their prevalence.
AI scams gaining momentum
AI advances equip scammers with deceptive tools, such as AI-powered chatbots. Recently, the CFTC warned of scams using AI promises, exploiting its growing use for false claims. Several fraud schemes were identified, including one causing a loss of 30,000 Bitcoins ($1.7 billion).
Deepfake vieos spreading
Last year saw a growing number of deepfake video ads, and the trend continues into 2024. Fraudsters often exploit high-profile figures’ images and AI-generated videos to endorse fraudulent crypto projects utilizing deepfake technology.
X is vulnerable to attacks
The infamous SEC’s official account is merely one, although memorable, event in the series of recent X hacks. Apparently, the crypto community should beware of social networks’ vulnerability to hacks and market manipulation.
Pig butchering might be biggest scam in 2024
Pig butchering, or romance scams, is gaining more attention as a primary threat. This type of scam uses emotional manipulation on social media or dating apps. Scammers create a fake identity, engaging victims before discussing investments. Victims often hesitate to report, contributing to underreporting.
Crypto investment scams persist, with a 23% increase reported in 2023. Scammers promise high returns and quick profits, but investment scams lack transparency about fund use and underlying mechanisms. Legitimate projects offer detailed information about goals, technology and the team.
Phishing reported more frequently
Phishing scams target crypto users through deceitful emails and links, draining $300 million in 2023. These attacks have been reported quite frequently: MetaMask, Blockstream and Trezor wallets recently faced new and dangerous phishing attacks.
Double scams exploiting recent victims
With more investment scams ending up in court convictions, other fraudsters lean into the victims’ search for recovery. The rise of “double scams” adds complexity to crypto fraud. Victims face a second wave from firms posing as recovery agents, promising to reclaim lost funds for fees.
Simple tips to avoid crypto scams
- Exercise caution with promises of big profits, double investments, or free money.
- Check for communication errors.
- Avoid transactions with unclear details.
- Stay alert for contracts and manipulation tactics.
- Question unusual endorsements from influencers.
- Adopt vigilance and research before considering any investment.
For more information, check our ultimate guide How To Avoid Crypto Scams in 2024.