Crypto Boom Attracts Scammers: Here’s What to Watch Out For

SEC warns of surging crypto scams targeting eager investors, highlighting five tactics to watch out for in the crypto industry.

Scammer threatening you for money.
Created by Kornelija Poderskytė from DailyCoin
  • Crypto scams have been on the rise, targeting excited investors with various cunning tactics.
  • Don’t be fooled by “guaranteed returns” or pressure to invest quickly. Instead, learn how to spot these red flags.
  • The SEC has urged caution and has provided tips to help you navigate the exciting but risky world of crypto.

The cryptocurrency market continues its meteoric rise, and with it comes a growing threat: sophisticated scams targeting eager investors. The U.S. Securities and Exchange Commission (SEC) recently issued a warning, urging caution amidst the crypto excitement due to a rise in crypto-related fraud.

5 Scam Tactics to Watch Out For

These scams are becoming increasingly common, and vigilance is crucial for anyone involved in cryptocurrency. Whether you’re a seasoned investor or just starting your crypto journey, staying informed and alert against these deceptive tactics is paramount.


The SEC’s warning highlights the need for caution in this rapidly evolving and dynamic landscape. They identified five common scams currently plaguing the cryptocurrency space:

Social Media Trickery

Scammers are adept at building rapport with potential victims on social media platforms, sometimes even through seemingly harmless text messages. They might pose as an acquaintance, quickly steering the conversation towards an “unbelievable” crypto investment opportunity. 

Often, they create fake websites showcasing inflated profits and even allow small initial withdrawals to build trust. However, once victims invest larger sums, their money vanishes into the scammers’ digital pockets.

AI Hype Scam

Some scammers capitalize on the current fascination with cutting-edge technologies like Artificial Intelligence (AI). They lure investors with buzzwords like “machine learning” and “AI-powered investments,” promising astronomical returns through fabricated crypto schemes. 


These scammers might even leverage AI itself to create deceptive marketing materials, including deepfake videos featuring celebrities endorsing their scams.

Impersonation Fraud

Criminals are resorting to impersonating trusted figures like government agencies or established organizations, including the SEC itself. They may hijack social media accounts to send messages appearing to come from friends or family. “Always verify the source of any message, even if it seems familiar,” advises the SEC.

Pump-and-Dump Schemes

The SEC also cautioned against pump-and-dump schemes targeting crypto assets, particularly “memecoins” – digital tokens linked to internet trends and pop culture phenomena like Dogecoin. Scammers aggressively promote these memecoins on social media, sometimes even advertising a “pre-sale” to attract investors and inflate the price. 

However, this is purely manipulative. “The scammers then ‘dump,’ or sell their holdings before the hype fizzles out, profiting from the inflated price,” explains the SEC. This rapid sell-off typically leads to a dramatic price crash, leaving unsuspecting investors with significant losses.

Advance Fee Fraud

This age-old scam resurfaces in the crypto world. Fraudsters demand additional fees from victims to supposedly process delayed withdrawals or unlock “frozen” accounts. They might even pose as recovery specialists offering to retrieve funds lost in previous crypto scams, but only after paying upfront fees.

Recovering Lost Funds Can Be Difficult, SEC Warns

The SEC emphasizes the difficulty of recovering funds sent via cryptocurrency due to the anonymous and irreversible nature of blockchain transactions.

The agency urges investors to independently verify investment claims and exercise skepticism towards unsolicited offers or social media hype. They emphasize the importance of only investing what you can afford to lose, as cryptocurrency remains a high-risk investment.

With billions lost annually to crypto scams, the SEC aims to empower investors by equipping them to recognize the red flags of fraud in the digital asset market. As cryptocurrency adoption continues to rise, authorities warn that scammers’ tactics will likely become even more sophisticated.

On the Flipside

  • Cryptocurrency, despite the scams, holds promise for innovation in financial services and could potentially lead to more efficient and inclusive financial systems.
  • The SEC warnings highlight the need for investor education. Increased awareness about cryptocurrencies and responsible investment strategies can help mitigate scams.

Why This Matters

The SEC’s warning exposes a dark side to the cryptocurrency boom. These scams not only threaten individual investors’ finances but also erode public trust in the entire market. By highlighting common tactics, the SEC empowers investors to protect themselves, fostering a healthier and more sustainable crypto ecosystem for everyone.

If you found this article about scammers intriguing, you might also enjoy this deep dive into the world of cyber security and how a hacker actually returned stolen funds:
$71M Bitcoin Scammer Refunds Victim After Likely Negotiation

This article underscores the importance of vigilance in the cryptocurrency space. Learn more about scammers targeting users with phishing attacks on Etherscan:
Crypto Scammers Target Etherscan Users with Massive Phishing Ads

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.