• Global Targeting: The U.S. is a prime target for scams because of its comparative wealth and willingness to embrace speculative markets. In addition, many Americans value online relationships, making them easy prey. Plus, let’s face it — many investors are drawn to get-rich-quick schemes. Should AI Be Blamed for The Rise In Crypto Fraud? Not entirely, but AI has made scams more convincing. While AI gets much of the blame, it’s one piece of the puzzle. AI-generated phishing emails are grammatically flawless, and deepfake technology allows scammers to impersonate high-profile figures and even executives. The result? Fake investment pitches or urgent transfer requests that seem legitimate. However, AI isn’t just a tool for bad actors. It’s also a game-changer for crypto fraud detection. Machine learning helps financial institutions analyze large amounts of data to identify red flags, like unusual transactions or deviations from a customer’s normal behavior. The key is leveraging fraud detection software to stay one step ahead of evolving tactics. Top 10 Crypto Scams According to the FTC, the top10 crypto fraud trends to watch are: 1. Investment Scams: Investment scams come with “get rich quick” and “no risk” promises, often initiated through social media or online dating apps. In these scams, crypto can be the investment offered or the payment method. The invested crypto goes straight into the scammer’s wallet. 2. Romance Scams: Romance scams prey on relationships and have both an investment and payment angle. After gaining trust, the perpetrator pretends to have wealth and casually offers investment tips to get their scheme rolling. Once a rapport is established, the victim is asked to send crypto to the scammer. 3. Business, Government or Job Impersonation Scams: In a business, government or job impersonation scheme, the perpetrator presents themselves as a trusted online source, such as Amazon, FedEx or a user’s bank, and convinces users to send them funds by buying crypto. The crypto offered by the scammer is fraudulent. 4. Rug Pull Scams: So-called rug pull scams are when investment scammers propose a new crypto opportunity or nonfungible token (NFT) that requires funding. After the project initiators receive payment, they disappear, leaving their investors no avenue to get money back. 5. Phishing Scams: Phishing scams use emails with malicious links to gather personal details, such as users’ crypto wallet key information. If they obtain enough information, the scammer can gain unfettered access to victims’ crypto. This type of fraud can also be perpetrated via text message in a method known as “smishing.” 6. Social Media Scams: The FTC reports that half of those who have reported crypto losses since 2021 said the scam began with an ad, post or message on social media. The most identified platforms used were Instagram, Facebook, WhatsApp and Telegram. 7. Ponzi Schemes: Ponzi schemes via cryptocurrencies work the same way they do with traditional payment methods. Scammers collect funds from new investors in order to pay the older investors, creating no legitimate investment opportunity and leaving investors with no recourse. 8. Upgrade Scams: Crypto platforms are a form of software that, at times, requires upgrades. Consumers are accustomed to upgrades as part of innovative technology. They can easily be scammed into giving up their private keys as part of an “upgrade” that turns out to be fraudulent. 25 Colorado Banker
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