AI Blockchain Scam: How to Safeguard Against these Scams

• Scammers try to create legitimacy in the eyes of the user by using AI and AI narratives.
• The most popular example of this scam is ChatGPT, there were over 400 listings by the name of ChatGPT.

AI blockchain investment fraud combines AI and blockchain technology to lure unsuspecting customers into investing their money. It preys on individuals seeking quick profits or those unfamiliar with blockchain and AI. This scam exploits the allure of innovative technologies to deceive investors, leading to significant financial losses.

This scam is growing day-by-day, raising the concern of regulators and investors. Scammers try to create legitimacy in the eyes of the user by using AI and AI narratives. 

For example, in California, the California Department of Financial Protection and Innovation (DFPI), stopped the operations of five companies in the city for deceiving their users’ funds and using them for unethical activities.

There are many reasons for the increase in AI blockchain scams. First is the hype around AI technology and blockchain technology, which is attracting people to invest money in them and take handsome rewards in less time.

Second is decentralisation of the blockchain network, which makes it difficult for investigating agencies to track scammers. Third is the lack of awareness of the AI scam, which makes it easier for scammers to trap people who don’t have knowledge of AI and blockchain.

Types of AI blockchain Scam

• Pyramid Schemes

It is a fraudulent scheme that lures people by promising them good money with little or no risk. In this customer has to add a certain number of people to the scheme and further tell them to add more people to the scheme. As the scheme grows, it becomes difficult to add new investors and eventually the scheme collapses and leaves investors with no money.

• Scam From the Sale of Tokens

This includes initial coin offerings (IOCs), initial DEX offerings (IDOs), and initial exchange offerings (IEO). Basically, these are the sources from which companies raise funds from the public to bear the cost for new projects. The most popular example of this scam is ChatGPT, there were over 400 listings by the name of ChatGPT when there was buzz around it but officially, ChatGPT never listed itself and never asked people to invest in it.

• Fake Investment Platform

Nowadays, scammers are creating fake investment platforms that promise the public easy money. They create the interface in such a way that it looks legitimate to people and once people invest money in them, they steal all their money. 

How to prevent oneself from AI scam

• Know the Industry

The first and the most important thing while investing in any industry, one should have complete knowledge of industry. One should try to get current knowledge of the industry by reading from authenticated sources and taking necessary courses. 

• Do Your Research

Before investing in any of the instruments, one should do research by themselves and try to take a deep dive in the information that is needed for investing in the industry.   

• Sift Through Investment

Investors always try to diversify their investment portfolio and should not put all the eggs in one basket. Timely, investors should jump from one to another investment in a way to increase their profits. 

Conclusion

AI blockchain scams exploit the allure of innovative technologies to deceive investors, resulting in significant financial losses. Regulators and investors are increasingly concerned about this growing issue. To protect oneself, it is crucial to have a comprehensive understanding of the industry, conduct thorough research, and diversify investments wisely, thereby minimising the risk of falling victim to these fraudulent schemes.