President Trump’s recent endorsement of cryptocurrency signals a shift towards deregulation, alongside a concerning rise in crypto scams. Investors lost $9.9 billion in scams last year, driven by increased adoption and advanced fraudulent tactics. Experts stress the importance of consumer awareness and caution against unsolicited messages. Recommendations for crypto safety include secure wallets, thorough research, and avoiding high-risk investment schemes.
Recently, President Trump proclaimed the United States a “bitcoin superpower” at the Blockworks Digital Asset Summit, signalling a shift from his previous scepticism towards cryptocurrency. However, this newfound enthusiasm coincides with a surge in scams within the crypto space, with investors losing around $9.9 billion in 2022, as reported by the blockchain analysis firm Chainalysis.
Chainalysis’s cybercrimes research lead, Eric Jardine, highlighted that the increase in cryptocurrency scams is likely driven by rising consumer adoption and the usage of advanced AI by fraudsters. Even if the rate of scam activities remains constant, the overall scam volumes are projected to grow due to increased participation in the crypto ecosystem and technological advancements that enable scams.
Shortly after taking office, Trump initiated an executive order to enhance the crypto sector, including the establishment of a regulatory framework and a potential national crypto stockpile. While this regulatory approach may foster legitimate businesses, it also presents a wider opportunity for scammers to exploit a burgeoning market.
Experts emphasise that heightened market ignorance makes consumer awareness a crucial defence. Terence Grugan, an attorney at Ballard Spahr, warns that while legitimate products exist, the likelihood of illegitimate ones emerging increases, thereby highlighting the importance of thorough research before investing.
There are various types of crypto scams, ranging from simple to sophisticated. Ponzi schemes mislead investors into believing they will achieve high returns through non-existent legitimate activities, while simpler scams may encourage individuals to withdraw cash for investment in a bitcoin ATM.
“Pump-and-dump” schemes artificially inflate token prices to attract investors before the scammers cash out, while “rug pulls” involve coin owners profiting at the expense of others. Additionally, “pig butchering” scams depend on building online relationships before soliciting crypto transfers, representing 32% of digital asset scams last year according to Chainalysis.
Jardine advises avoiding unsolicited messages, as many scams begin through unknown SMS or social media contacts. By not engaging with unsolicited outreach, consumers can effectively reduce their risk of falling victim to these schemes.
Despite fears of scams, surveys show most crypto owners remain positive about their investments under Trump, but basic security precautions are vital. Users should consider secure wallets with two-factor authentication and be cautious of high-yield schemes that seem overly promising.
Buying crypto from exchanges under strict regulatory oversight can provide added security, as per insights from financial experts. It is also recommended that individuals verify correspondence authenticity before exposing sensitive information to potential fraud.
When securing private keys—critical for accessing assets—hardware wallets or “cold wallets” can offer offline protection. Additionally, protecting the “seed phrase” is imperative; sharing it can compromise security. Finally, experts advocate that if one does not understand an investment product, they should refrain from investing altogether.
