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Scammers try to cash in on the hype surrounding popular artificial intelligence chatbots, including OpenAI’s ChatGPT and Microsoft’s Bing AI.
A search on DEXTools, an interactive crypto-trading platform that tracks prices, reveals around 287 tokens that mention “ChatGPT” in their name.
However, neither Microsoft nor OpenAI, the developer of ChatGPT, has announced an official cryptocurrency launch.
It turns out that these digital coins are not actually associated with viral AI tools and many could be “pump and dump” schemes meant to dupe investors.
A “pump and dump” scheme, also known as a “rug pull”, occurs when scammers generate a lot of interest in a particular coin that is trading at a low price. They then promote the coin and convince investors to pour money into it in order to drive up the price.
When the price reaches a certain level, the scammer then floods the market by selling his share of the coin at the inflated price and reaps the profits. Traders, on the other hand, end up with a coin that is rapidly decreasing in value due to the increased supply.
Peckshield, a blockchain security firm, has detected dozens of newly created “BingChatGPT” tokens, the company said in a statement. Tweeter February 20. The company has identified at least one of these digital coins as having been created by a user known for his “pump and dump” cryptography schemes.
Legally, scammers are not allowed to name their token after ChatGPT, Bing or any other brand name without being affiliated with these companies, but it is difficult to crack down on this practice.
“These things are moving so fast that by the time a lawyer’s letter reaches the right people, the people behind the tokens have probably moved on,” said James Ledbetter, editor and publisher of the fintech newsletter. END,” to CNBC Make It.
Fraudulent crypto tokens are typically deployed on “permissionless blockchains,” also known as public blockchains, says Chen Arad, chief operating officer at Solidus Labs, a cryptocurrency risk monitoring and surveillance company. of the market. This means that anyone can issue any token (using any name) to platform users without needing permission from an admin or moderator.
“On the one hand, no one needs to authorize the activity, potentially enabling accessibility and more open financial services,” says Arad. “On the other hand, it creates new challenges like this, where scammers take advantage of openness and new tools are needed to simplify and assess risks like fake spoofing tokens.”
Crypto investors should be wary of newly minted tokens that use the names of popular products or celebrities.
For cyber thieves, this can be an effective way to grab the attention of investors looking for a quick win and trick them into making FOMO-driven decisions without thinking too much, says Arad.
One of the most notable examples is the Squid Game token, which bills itself as a “play-to-earn” cryptocurrency, in which users purchase crypto and place it in a virtual wallet connected to a live game. line or mobile.
A March 9 public service announcement from the FBI warned that some scammers advertise tokens as games to win, telling victims that they will earn more in-game rewards by depositing more crypto into their wallets. However, when users stop depositing digital funds, criminals then empty the victim’s wallet using a malware program that the victim unknowingly activated when they joined the game, the FBI warns.
The Squid Game token, however, turned out to be a “mat shot” scheme. The developers abruptly abandoned the project before the game launched and managed to steal more than $3 million from investors by the end of 2021, says Arad. And they did it simply by using the name of the famous show at the right time when it was trending, he adds.
The best way to avoid these scams is to stay away from crypto altogether, says Ledbetter. Otherwise, as with investors in other assets, crypto traders should do their research before purchasing a new token.
Fraudsters rely on investors to make quick, uneducated decisions based on fear of missing out, says Arad. So a red flag to watch out for is if a cryptocurrency promises you will make a lot of money investing in it.
“Only scam artists will guarantee profits or big returns,” warns the Federal Trade Commission website. “Don’t trust people who promise you quick and easy money from the crypto markets.”
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