Crypto scams are surging across the United States, with the FBI’s latest cryptocurrency report revealing that Americans lost a staggering $5.6 billion in 2023—a worrying 45% increase from 2022. Alarmingly, older adults, particularly those over 65, were hit hardest, collectively losing more than $1.6 billion. California has borne the brunt of these losses, recording the highest state total at $1.1 billion.

What makes these losses even more striking is the volume of financial fraud complaints received by the FBI compared to total losses reported crypto-related crimes, which accounted for around 10% of complaints received but nearly 50% of total losses to financial schemes in 2023. This points to the current effectiveness of crypto scams in extracting large sums of money from victims. The decentralized nature of cryptocurrency may also play a part in this, with a lack of regulation and relative irreversibility of transactions once made, investors must protect themselves, but if they are unable to, they are highly vulnerable to scams.

The FBI is working to proactively warn victims about possible scams as bad actors continue to seek cryptocurrency through fraudulent investments, tech support, romance scams, and employment scams. Despite this effort, evolving financial technology is still unfamiliar to investors, and a lack of financial education has made them more susceptible to crypto scams.

What puts crypto investors at risk?

The crypto industry’s financial environment, with its volatility and potential for lucrative returns, may make investors more susceptible to risky investing decisions and scams. The fear of missing out has been reported to drive investment choices for 8/10 investors. The psychological pressure and rushed decision-making associated with FOMO can be exploited by scammers, and with a lack of verified educational resources for investors, FOMO will continue to have a distinct impact on investor vulnerability.

Research from InvestiFi has also found that 35% of investors rely on internet searches for financial knowledge to help manage their investments, while 25% don’t use any sources. Forty percent of 18-25-year-olds use financial influencers for their financial knowledge, and 50% of those 55 and older do not have a source for their financial knowledge, leaving them susceptible to poor investment decisions.

This reliance on informal sources creates a multitude of investor problems. Fraudulent accounts created by scammers can be created just as easily as legitimate ones, going undetected due to the lack of verification required. It can also lead to investor overconfidence, the vast amount of advice online can present investors with the illusion of a comprehensive understanding, especially if new to the market, regardless of the relevance and validity of the advice. Overconfidence tends to lead to an underestimation of risks and increases such investors’ chances of poor investment choices or susceptibility to scams.

One of the barriers to crypto investing for many account holders is this lack of financial literacy. The majority of investors do not have access to financial advisors due to a lack of initial funds. Financial institutions must adopt educational tools and resources; by providing educational content such as videos, articles, webinars, or personalized insights within the digital investing platform, financial institutions can differentiate their offering from fintechs.

This positions the institution as a trusted advisor that helps account holders build their financial knowledge and confidence.

What can financial institutions do to safeguard their account holders?

By offering in-house financial education resources, whether through blogs, dedicated advisors, or easy-to-understand publications, institutions will fill this gap, positioning themselves as trusted, go-to sources of information. If institutions implement these measures early, they could take advantage of a huge market of people wary of crypto investment and looking for accountability behind the advice.

Additionally, offering personalized advice through robo-advisors or in-house experts will support those seeking guidance from informal sources such as independent advisors or the internet. Accessible and reliable financial education can strengthen customer relationships, improve engagement, and lead to more account holders investing and managing their finances directly within an institution’s ecosystem.

In the United States, it’s common for financial institutions to require a minimum of $25,000 to access a financial advisor. However, the majority of people interested in investing don’t meet this threshold, creating a gap where many potential investors are left without guidance, potentially leading them to third-party apps or independent influencers with often no financial barrier to accessing information.

Financial institutions have an opportunity to bridge this gap by offering accessible, low-barrier investment options. With the addition of digital investing solutions, educational resources, and entry-level investment tools, individuals with smaller portfolios will be empowered to start investing in crypto confidently. Account holders also gain the financial education to make safe crypto investment decisions and avoid unnecessary losses.

Kian Sarreshteh

Kian Sarreshteh has consulted with numerous blockchain, cryptocurrency, and fintech-focused companies across the United States since 2015. In 2015, he founded an IT recruiting and consulting company focused on financial technology and transformed the company into a multi-million dollar operation. Also, in 2015, he acquired a 35-year-old background check company that focused on regulated industries, including financial services. He led new product development, including the development of a Blockchain database to store background check records. Prior to his departure, Kian was instrumental in the company’s growth, with a 50% increase in revenue. In 2020, Kian co-founded CryptoFi, Inc.— now known as InvestiFi.

Max Burwick has called Pump.fun “the evolution of MLM scams,” accusing it of exploiting investors—and now his law firm is preparing a lawsuit.

On Jan. 15, Max Burwick—founder and Partner at Burwick Law—voiced strong criticism against platforms like Pump.fun as examples of what he calls “the ultimate evolution of multi-level marketing scams, preying on human desperation and the digital attention economy.” 

He critiqued that these projects leverage the “digital attention economy” to reel people in—especially younger audiences or those facing economic hardship—and ensnare them in a cycle designed to enrich early insiders.

Pump.fun, according to Burwick, allegedly frames “exit liquidity” as a game—making light of the very real financial losses inflicted on late entrants.

Pump.fun is a decentralized platform on the Solana (SOL) blockchain that simplifies the process of creating and trading meme coins, aiming to make participation in the crypto market accessible to non-technical users.

Burwick didn’t hold back in taking shots at the platform, saying they were the antithesis of blockchain innovation. He says platforms like Pump.fun don’t embody the fundamental principles of transparency, fairness, and empowerment that crypto was originally built on.

Burwick reiterated that meme coins aren’t innovative in and of themselves but prey on addiction and youth. His comments come as Burwick Law picks up the gauntlet in a legal case involving Pump.fun, demanding accountability in company conduct within the crypto ecosystem. 

Pump.fun faces legal action

On Jan. 15, Burwick Law said that it has been working with individuals who lost considerable amounts of money to meme coins via rug pulls and misleading promises linked to the platform. The law firm has now made a website to help clients who lost millions of dollars in the fiasco. 

Burwick Law claimed Pump.fun hosted obscene and corrosive content displaying violence, racism, and antisocial behaviors. They attacked the anonymous creators of the platform and others in the meme coin ecosystem for luring day-to-day investors with false promises.

As of Jan. 15, the platform’s total revenue surpassed $422 million, with nearly $25 million generated in the last seven days alone, according to Dune Analytics.

Burwick Law contends that the meme coin launchpad offers little actual support for its users and instead facilitates rug pulls, where developers walk away with investor funds after raising capital. “As the system grows, early adopters cash out by dumping their holdings on later participants, effectively stealing from them,” Burwick remarked.

In November 2024, the platform suffered major backlash due to its live streaming feature. A user threatened to harm himself to promote their meme coin during a live broadcast, causing panic in the entire crypto community. While Pump.fun did acknowledge the damage done and changed its moderation policies, there were no talks about losses that investors suffered.

According to an analysis by Pump.fun wallet examiner Adam Tehc, only 0.4% of the 14 million wallets interacting with Pump.fun reported profits exceeding $10,000—highlighting the extent to which most users have suffered losses.

Max Burwick is not the only one who has a strong stance against the platform. On Jan. 15, Cosmo Jiang of Pantera Capital told Wire “that majority of meme coins launched through Pump.fun wind up nearly worthless”, sharing a sentiment similar to Burwick.

As the cryptocurrency market grows, so do the tactics of scammers aiming to exploit unsuspecting individuals. Pro XRP lawyer John Deaton has issued a stern warning about evolving crypto scams. Deaton urged users to exercise caution and vigilance in safeguarding their digital assets.

Crypto Scam Alert: John Deaton Warns Users Against Evolving Tactics

In a detailed post on social media, John Deaton highlighted the dangers of sophisticated crypto scams targeting new and experienced users. Deaton stressed the importance of never sharing sensitive information like seed phrases or passwords. These details act as the key to accessing a user’s crypto wallet and can lead to the complete loss of funds.

Deaton shared a personal story about a near-miss incident where scammers hijacked his home WiFi and attempted to trick him into revealing his login credentials. The attackers used fake emails and calls posing as customer support representatives. John Deaton described the moment as a critical learning experience. He emphasized that scammers often create a sense of urgency to manipulate their targets.

The Pro XRP Lawyer added, 

“What people need to understand is that, not only do the emails look official, but it creates a sense of urgency and fear. The email states that your funds are at risk and you need to take immediate steps to protect your funds or they could be lost forever.”

Amid the increasing wave of crypto scams, Pudgy Penguins NFT holders have become the latest target. Coingape recently reported that scammers are using deceptive Google ads to lure users to fake websites designed to steal wallet credentials. This incident highlights the growing sophistication of attacks in the Web3 space and the urgent need for heightened security measures.

Sophisticated YouTube Scams Target Crypto Enthusiasts

A recent cybersecurity report from Kaspersky uncovered a new scam involving the use of YouTube comments. Scammers post crypto wallet seed phrases, claiming to seek assistance in transferring funds. These comments appear under finance-related videos and often portray the scammers as naïve beginners.

When an unscrupulous individual attempts to access the wallet using the shared seed phrase, they find it contains cryptocurrency, often USDT. However, to withdraw these funds, a small fee in TRX tokens is required. Victims transferring TRX to the wallet for fees soon discover their tokens are automatically redirected to the scammer’s account.

Multi-Signature Wallets: The New Tool in Crypto Scams

The wallet used in these scams is typically a multi-signature wallet, which requires multiple approvals to authorize transactions. This setup makes it impossible for the would-be thief to move the funds, even after sending TRX for fees. Instead, their TRX tokens are immediately drained, leaving them empty-handed.

More so, John Deaton pointed out that these scams exploit human greed, turning opportunistic individuals into victims. He warned that such schemes are becoming increasingly common and urged users to remain vigilant.

John Deaton advised users to adopt robust security measures to protect their digital assets. He emphasized the importance of enabling two-factor authentication and verifying the authenticity of emails and links before clicking. Additionally, he reiterated the critical rule,

”NEVER share passwords or seed phrases.”

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.