The boom of cryptocurrency scams worldwide has left investors cautious, with billions of dollars vanishing into fraud schemes over the past year alone.
Analysts now warn that fraudsters are exploiting new digital loopholes and using artificial intelligence to target even the smallest crypto investors.
In Britain, AI-driven scams have reportedly increased by 456% between May 2024 and April 2025, according to data from CryptoWinRate. Meanwhile, U.S. officials reported that Americans lost more than $1.6 billion in just the first quarter of 2025 to crypto-related fraud.
Despite the risks, cryptocurrency remains a rapidly growing market worldwide, but many experts say that only informed, savvy investors will avoid becoming the next victims.
Muhammad Talha, lead analyst at CryptoWinRate, stressed the importance of verifying online trading platforms before depositing any money into them. Fake exchanges have lured in hundreds of unsuspecting investors with slick marketing schemes, only to disappear with their money overnight.
“Legitimate cryptocurrency exchanges maintain proper registration with financial authorities and display clear contact information,” Talha said. “Before depositing any funds, check if the platform has appropriate licences from regulatory bodies, such as the Financial Conduct Authority in the UK.”
Another tell-tale sign of crypto fraud: promises of high, risk-free profits.
“If someone guarantees you 20% monthly returns on your crypto investment, that person is not being truthful with you. Markets simply do not work that way,” Talha added.
Crypto-experts agree that security begins with protecting your access credentials.
Private keys and seed phrases should never be shared and should be stored offline whenever possible. Hardware wallets, metal seed storage tools, or encrypted offline drives, for example, provide much more protection than leaving sensitive information in a cloud folder or email.
“Your private keys should never be shared with anyone under any circumstances. Store them offline in hardware wallets whenever possible,” Talha warned.
Trajan King, CFO of Zellix, recommends adding layers of protection against cyberattacks, including a VPN (virtual private network) to encrypt any online activity. VPNs essentially hide your IP address and help defend against phishing attacks and malware.
Experts also suggest that investors enable two-factor authentication on every account that is connected or associated with their crypto wallets.
Ultimately, protecting your investments in digital currency starts with doing the homework. Anyone interested in buying crypto online should read whitepapers, research teams promoting coins, and understand how the cryptocurrency market fluctuates before buying.