3 Most Common Crypto Scams in 2024 and How to Spot Them

As the number of individuals adopting cryptocurrency grows, so does the number of malicious actors with ulterior motives. The Crypto Scam Tracker of the Department of Financial Protection & Information (DFPI) in California shares current information on scams as they emerge, including detailed descriptions and the names of the fraudulent websites involved.

The tracker contains information on scams derived from consumer complaints. It reflects accounts of financial losses that complainants have attributed to fraudulent or misleading activities. The DFPI, however, clarifies that it has not confirmed the loss claims made by these individuals.

Here are three of the most common crypto scams in 2024, in no particular order, according to data from the DFPI.

Fraudulent Trading Platform

This is when a scammer creates a fake website or app, luring victims into depositing money by falsely presenting it as a chance to invest in a convincing revenue-generating opportunity. Such sham platforms look legitimate, even mimicking price action and generating fake profits. The FBI‘s Internet Crime Complaint Center’s (IC3) “Cryptocurrency Fraud Report 2023” lists this as the most prominent confidence-enabled type of crypto investment scheme last year. Similarly, the DFPI tracker shows that the use of fraudulent websites is still at large this year and continues to target potential investors.

As reported by the DFPI, one such scam targeted a victim who met a stranger online through the platform sparkrlv.com. This individual guided them on how to send cryptocurrency to the site for trading. The victim transferred $110, expecting to earn back $117, but has not been able to get their money back, and the website has ceased operations.

How to spot this type of scam: These fake platforms likely will not have adequate documentation, such as white papers and comprehensive roadmaps. If they do, they are typically of subpar quality. They frequently employ aggressive marketing tactics and promises of quick wealth.

Pig Butchering Scams

This type of scam primarily involves various tactics to build relationships with victims, whether for social, romantic, or business purposes, eventually leading them to a phony investment scheme. Typically, the scammer connects via social media or dating apps, directing the victim to move conversations to private channels like WhatsApp to build trust. When they feel confident in their connection with the victim, they introduce purportedly lucrative crypto investments and urge the victim to create an account on a fake exchange. The scammer creates a facade of realistic gains to continue engaging the victim. However, after depositing funds, the victim usually finds they can’t withdraw their money. The scammer then pressures them to invest even more under various pretexts.

For example, the DFPI has documented a pig butchering scam where a victim was approached by an “analyst” on WhatsApp and was lured into a group chat that offered stock and crypto trading advice. The self-proclaimed analyst guided the victim to crypto contract trading on the Volcanic Exchange app, leading them to invest $500. Believing their account had reached $30,477, the victim was unable to withdraw their funds due to fictitious initial public offering (IPO) delays. In total, they transferred $43,000, but the website has since shut down, leaving them without any recovery of their investment.

How to spot this type of scam: These scammers often use WhatsApp and texting, sometimes pretending to be someone you know. Things to look out for are unknown contacts and unverifiable identities. If someone avoids meeting or talking on the phone, it’s a strong sign they may not be who they claim to be.

Imposter Scams

In this type of fraudulent activity, a scammer masquerades as a credible business, a government official, or a celebrity to gain illicit access to a person’s systems and private data. Their intent is typically to profit financially by stealing the victim’s personal belongings or assets.

An incident reported to the DFPI detailed the account of two victims who were deceived by a YouTube video promoting an XRP “airdrop,” allegedly featuring Ripple CEO Brad Garlinghouse. The video encouraged viewers to send between 1,000 and 500,000 XRP to a displayed QR code, promising to return double the amount. The XRP wallet they were asked to send funds to turned out to be a counterfeit.

How to spot this type of scam: The names of the companies or websites that scammers use can often mimic those of legitimate entities in the market, which creates a risk of confusion for consumers. To avoid becoming a victim of fake companies or websites, especially those that are seemingly being endorsed by well-known figures, conduct thorough research before making any investments.

Other common crypto scams include asset recovery, advance payment, hacking, blackmail, and romance scams. The DFPI constantly warns against uninformed investment decisions and communicating with strangers online. The department operates a crypto unit, led by its commissioner, which specializes in monitoring, examining, and enforcing laws concerning crypto assets and institutional investments.

Malaya has positions in SHIB, ETH, USDT, MATIC, etc. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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