Top 5 Cryptocurrency Scams Of 2024

It’s a fast-paced world and the credit for that goes to digitalization. It’s not just about having a digital version of data, it’s also the lightning-speed internet connectivity capabilities that allow information and insights to be shared instantly.

Think of it: business processes operate on secure, decentralized networks AKA blockchains, data is shared and analyzed over distributed networks and financial transactions have also moved on from cold hard cash to globalized online mediums. Yes, we’re talking about cryptocurrency, which offers people a quick, safe, secure, transparent and cost-effective method of conducting transactions.

However, despite the quantum leap in financial innovation, threats are lurking in the darkness. We’re talking about cryptocurrency scams! #Shudder

Individuals and businesses need to protect themselves from such threats, especially considering how scams are on the rise over the last few years. Between 2021 and mid-2022, the losses from cryptocurrency scams were reported at $1 billion. This number rose to $3.3 billion in 2022 and grew 38% in 2023, resulting in $4.57 billion lost to crypto scams.

So, read on to learn the Top 5 Cryptocurrency Scams Of 2024, with the help of your friendly neighborhood Spider-Man!
 

The Top 5 Cryptocurrency Scams Of 2024

Just as Spider-Man (and his villains) went through changes throughout the reboots, so did villains in real life – we're talking about scammers and cybercriminals.

Just when people learn about the prevalent technique – BAM! - scamsters come up with a new way to defraud them. This is why it’s important to keep up with the latest techniques that are gaining popularity among digital cybercriminals!

So, let’s dive in and explore the Top 5 Cryptocurrency Scams Of 2024 you need to be aware of!


 

Scam Style 1: Rug Pull Scams

What the organizer of the wrestling competition did to Peter Parker was quite like a rug-pull scam.
 
In these scams, fraudsters “pump up” or artificially inflate the price of a new crypto project, an NFT (non-fungible token) or a coin that seems legitimate, leading investors to buy into the product via crypto exchange platforms. Scammers then exploit vulnerabilities in smart contracts, which are usually present from the beginning but are well hidden.

Once the value hits a high mark, the scammers lock the smart contract code, preventing investors from swapping or selling their assets for profit and disappearing with the money. This leaves the investors with a worthless or largely devalued investment!

One of the biggest rug pull scams occurred in 2021 and was called Squid Coin. The project banked on the popularity of the hit Netflix series, Squid Games, to propel its product. It required them to buy tokens to play online games and earn more tokens later, which could be exchanged for other cryptocurrencies.

Over time, the value of the Squid Coin climbed from 1 cent to $90 per token. When trading stopped, the scammers got away with $3.3 million, while the coin’s market capitalization dropped from $2.2 trillion to nearly zero instantly.

These scam projects often lack transparency regarding developer identities, exaggerate claims about the project’s future or favor developers and early investors.
 

Scam Style 2: Phishing Scams

Just because we embrace innovation doesn’t mean we’ve forgotten the old ways!

Tobey Maguire’s Spider-Man is just as iconic today as it was back then, despite us doting over Andrew Garfield and Tom Holland!

Similarly, phishing scams aren’t new but are still popular with scammers. Cybercriminals send messages through email, SMS, social media or other platforms that contain harmful links to fake websites posing as legitimate ones. Once a user clicks on the link, scammers gain access to private data or request holders to enter their private crypto wallet key. Considering crypto wallet keys are unique and exclusive to account holders, having their keys stolen means that scammers can drain the wallet.

Phishing comes in different forms, with email phishing being the most prominent and straightforward kind. Spear phishing is more targeted and includes personalized messages. Whaling is personalized and aimed at high-profile business executives such as senior managers. Pharming includes creating a fake website that mirrors legitimate ones that scammers use to redirect users.

Phishing accounted for around 36% of all data breaches in the US according to Verizon’s 2023 Data Breach Report and Proofpoint found that 71% of all companies were at the wrong end of a successful phishing attack in 2023.

People, DO NOT click on suspicious links across any channel and if you do, don't provide any sensitive information. #StaySafe
 

Scam Style 3: Impersonation Scams

Peter Parker made money by selling photos of Spider-Man by pretending to be a freelance amateur photographer. In this case, one would understand why Peter hid his identity.

However, cryptocurrency scammers impersonate various people to defraud investors! This includes posing as government or law enforcement officials and convincing people that their accounts or assets are frozen as part of an investigation and the only way out of it is to pay them in cryptocurrency. This method also works with them posing as executives from big enterprises or a bank. In some cases, they pretend to be highly successful investment managers of promising crypto projects and provide unsolicited offers of crypto investments with huge returns.

Scammers also create fake endorsement photos and videos of celebrities and influential figures using artificial intelligence and deepfake technology. These are then posted on social media platforms through fake accounts to coax people into investing in bogus projects. All of this comes with highly realistic and detailed websites, logos and investment content!

Notable celebrities who have fallen prey to this scam include Prince Harry and Meghan Markle, Bill Gates, Mark Zuckerberg and Sir Richard Branson. Even crypto enthusiast Elon Musk wasn’t spared, with deepfake videos conveying he is launching a crypto project where investors can earn 30% returns in 3 months – so, do not blindly trust any project and DYOR (Do Your Own Research!).

 

Scam Style 4: Ponzi Schemes

Ponzi Schemes aren’t a new concept either. The only thing new about it now is that it’s found in the cryptocurrency world too!

Scammers build an intricate web of investors by promising them great returns or profits with low risk, which includes no legitimate profits or investments. To get new investors, scammers will attract holders with Bitcoin. The large sums of money received from new investors are divided to deliver returns to older investors and this cycle is then repeated.

Ponzi Schemes collapse when there aren’t enough new investors to support the payouts or when scammers run away with the money. For instance, in 2023, a South Korean company called “Blockchain for Dog Nose Wrinkles” promoted a blockchain app that identified dogs through their nasal folds. This investment promised 150% returns in 100 days but ended up defrauding investors of $127 million.

The same year saw a $120 million cryptocurrency Ponzi Scheme called The Solar Techno Alliance busted in India, while a global investment scheme called “CoinDeal” promised investors 500,000x returns and ended up costing investors $45 million.

It’s not easy to identify Ponzi Schemes, however, most come with red flags like high and guaranteed returns, lack of transparency, referral bonuses or pressure to recruit investors.

Remember, “If it sounds too good to be true, it probably is!”
 

Scam Style 5: Romance Scams

We all wanted Peter to settle down with Mary Jane at the end of the movie, considering how much he loved her. The crypto world isn’t shy of romance either, however, it’s the bad kind.

Scammers create fake profiles on dating, social networking other sites to connect with others. This includes a long play of gaining an individual’s trust, building an emotional bond and creating the illusion of love in the form of a long-distance relationship. After a while, the scammer tries to convince the victim to buy or invest in a fake project or transfer their assets.

This technique also includes a promise of meeting in person, at which point the scammer pretends to have financial problems and convinces victims to transfer money using cryptocurrency. In some cases, scammers can pose as friends or successful expert investors. Ultimately, scammers simply disappear with the loot!

It’s not just amateurs who fall prey to such scammers, in February 2024, a banking professional based in London was defrauded by a girl he met online on a matrimonial website.

Also called “pig butchering scams” and first mentioned in 2021, the FBI’s Internet Crime Complaint Center reported 4,325 complaints amounting to $429 million in the US alone! In April 2023, the US Justice Department reported over $112 million linked to such scams and in December 2023 reported about a syndicate with over 284 transactions and $80 million lost.

To stay safe, we ought to follow our mothers’ sage advice – “Don’t talk to strangers online!”

 

Final Word

While these types of scams are popular right now, investors should be wary of other types too, including giveaway scams, man-in-the-middle attacks, fake cryptocurrency exchanges, employment offers, fake apps, blackmail scams and more.

Scams are timeless, as new technologies that find their way into our lives are seen as golden opportunities by scammers to exploit businesses and individuals.

At the end of the day, investors need to be careful where, how and through whom they invest. They need to ensure they observe thorough research practices before investing. It’s important not to share private details with unverified sources and to avoid clicking on any suspicious links.

In addition to heeding threats, investors and cryptocurrency enthusiasts should also factor in the emerging trends of this futuristic financial instrument. We hope this article helps in keeping you safe from the top crypto scams!