One way this type of scam can play out is that after a fraudster has established an online relationship with you, the fraudster may claim to know about lucrative investment or trading opportunities, including investments involving crypto assets. The fraudster may direct you to a legitimate-looking (but fake) website or to a widely-used app that can be downloaded from a well-known app store, make it look like you have profited, and even allow you to withdraw a small amount of “profits,” further gaining your trust. The fraudster may even indicate that a relative or friend works at a financial firm or is an “insider” and therefore is able to provide trading information.

For example, they may post that your friend or family member has become a crypto asset expert and seeks friends to join in trading or investing. Even if you are certain that an investment pitch is coming from a friend or family member, keep in mind that they may have been fooled into believing that the investment is legitimate when it is not. Sometimes fraudsters target communities or groups by recruiting leaders or others to pitch an investment without them knowing that the “opportunity” is a scam.

It might seem exciting to invest in crypto asset-related investments that have a connection to AI, but be careful. Fraudsters also may use AI technology itself to produce realistic looking websites or marketing materials to promote investment scams, including crypto asset-related investment scams. Fraudsters may use catchy AI-related buzzwords. They may claim to deploy bots that use AI to find the best crypto asset-related investments. Make claims that you will make a lot of money when their only intention is to steal your money. Fraudsters often use the hype around new technological developments, like emerging AI technologies, to lure investors into scams.

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert because fraudsters continue to exploit the popularity of crypto assets to lure retail investors into scams. While federal and state regulators continue to bring enforcement actions in this space, recovering money from the fraudsters can be difficult because it can be challenging to trace and recover funds. Crypto assets may include assets commonly referred to as cryptocurrencies, crypto, coins, and tokens. Fraudsters often use innovations and new technologies to perpetrate investment scams, and this has been the case with crypto asset securities-related investments.

Then the promoters or others working with them “dump,” or sell, before the hype ends, profiting from the pumped up price. Fraudsters Demand Additional Costs That They Falsely Claim Will Allow You to Withdraw From Your Account, or to Recover Losses. In investment scams, including ones that involve crypto asset securities, fraudsters may demand that you pay additional costs, fees, or taxes to withdraw money from your account. Typically, after the promoters sell and take their profit, the price decreases rapidly, and everyone else who bought the tokens loses most of their money. Never make investment decisions based solely on information from social media (visit the next internet site) platforms or apps.