4 common forms of cryptocurrency scams

According to data from the US Federal Trade Commission (FTC), between January 2021 and June 2022, more than 46,000 people reported losing more than $1 billion in cryptocurrency. Here are some common types of scams.

AI Fraud

Taking advantage of the explosive growth of artificial intelligence (AI), hackers often create AI chatbots or virtual assistants to interact with victims. These malicious chatbots will provide misleading advice to lure people into investing in fake tokens and bogus initial coin offerings (ICOs).

With the help of AI, deepfake technology is also becoming increasingly dangerous in the wrong hands. Deepfake allows the creation of highly realistic digital content by manipulating and changing the original file, such as swapping faces in videos , photos, and audio.

As a result, scammers often steal the identities of famous people to commit fraud. For example, in a deepfake video that went viral on the X platform, a fake Elon Musk introduced a new cryptocurrency project and promised investors a 30% return in just three months. In December 2023, Singapore Prime Minister Lee Hsien Loong warned that his image was being impersonated by AI to solicit cryptocurrency investments.

Image of Elon Musk in deepfake video

However, AI can also be used to combat online scams. Researchers at the University of San Diego (USA) have developed an AI system to detect and expose cryptocurrency giveaway scams.

Ponzi scheme

A Ponzi scheme is a sophisticated financial scam disguised as an investment opportunity. The scammer pays interest to investors from money that new entrants have made, rather than from the project’s actual profits. When there are no more new entrants, the scheme collapses.

Social media scams

The most common form of fraud is hacking or creating fake celebrity accounts to promote cryptocurrencies. Although platforms such as X (formerly known as Twitter), Instagram, TikTok have taken many measures to combat cryptocurrency fraud, this situation still occurs frequently.

In 2020, the Twitter accounts of former US President Barack Obama, billionaires Bill Gates, Warren Buffett, Jeff Bezos... were hacked to commit large-scale Bitcoin fraud. According to CNN, the posts posted by the hackers had similar content, promising to double the amount of Bitcoin to those who transferred money to the wallet address.

Hackers use Bill Gates' account to commit fraud

Although the post was quickly removed, many people are still concerned about the security systems of these platforms.

In June 2023, the European Consumer Organization (BEUC) accused social networks of facilitating fraud involving digital assets. In a 20-page report, the watchdog highlighted apps like Instagram and TikTok as having lax policies that allowed scammers to target uneducated teenagers.

Fake exchange

Fraudsters often create fake websites that mimic major exchanges to trick victims. They often promise high profits to appeal to investors' psychology.

Initially, these sites may function normally and allow a small amount of withdrawal. But as the victim invests more, the site will suddenly disappear or refuse the withdrawal request. Additionally, some fake exchanges often have unusually high registration or withdrawal fees.

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