SEC Warns Investors of Growing Crypto Scams, Highlights AI Threats 

• Scammers are increasingly using AI technology to deceive crypto investors with realistic impersonations of public figures. 
• Crypto investors are often targeted on social media through schemes that build trust before offering fraudulent investment deals. 
• The SEC is adjusting its terminology and approach to crypto regulation, raising questions about its evolving stance.

The U.S. Securities and Exchange Commission (SEC) has once again warned investors about the dangers of cryptocurrency scams. In a recent social media post, the SEC highlighted the growing number of fraud cases that target crypto investors through various schemes. This warning follows the agency’s initial alert published in May. 

Targeting Investors Through Social Media 

One of the most common scams involves criminals contacting potential victims on social media platforms. They build trust through frequent interactions before proposing fake investment opportunities. Some fraudsters even pretend to be insiders to gain credibility. This approach has become more sophisticated as scammers exploit the growing interest in cryptocurrency. 

These scams are often referred to as “pig butchering” schemes, where scammers fatten their victims with promises of lucrative returns before stealing their investments. The SEC has also flagged the dangers of pump-and-dump schemes, where fraudsters artificially inflate the value of a cryptocurrency, only to sell off their shares once the price spikes, leaving other investors with significant losses. Meme coins are frequently involved in these schemes, drawing in unsuspecting victims. 

Types of AI Technology Applied in Fraud

A worrisome correlation is the massive application of AI technology to crypto crime. Recently the SEC has pointed out that fraudsters have been using artificially intelligent tools to do tricks to the voices of individuals who are popular in the media. One of the most famous examples of using such a tactic involved live broadcasting Apple CEO Tim Cook. It proved effective in propagating the scam because the voice owned by the artificial intelligence resembled that of a genuine stream.

New SEC’S Approach to Regulation of Cryptocurrencies

The most recent alert by the SEC also comes at the time when the agency has made slight shifts in how it regulates cryptocurrencies. It is significant to note that, in a recent settlement with a trading platform eToro, the SEC ceased to refer to Ethereum, or ETH., as a security in what is a shift in the terminology previously used. This has sparked concerns and some analysts noted that the SEC is gradually becoming notorious for being inconsistent in the classification of crypto assets.

While these new types of crypto scams emerge, the SEC is warning investors to exercise careful when someone offers an unsolicited investment, especially, on social media. They integrate AI technology into scams making it even more dangerous than before and that is why people should be more cautious than before.