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The AI Effect: Boom in Tokens Leads to Increased Fraud Risk

In the last month, the AI effect has been causing a boom in tokens related to this field, such as Fetch (FET), SingularityNET (AGIX), or Ocean Protocol (OCEAN). However, this has inadvertently become a double-edged sword for market fraudsters.

On February 20, the famous blockchain security company PeckShieldAlert issued a red alert after discovering dozens of scam tokens named BingChatGPT on Ethereum, BNB Chain, and Arbitrum. According to PeckShieldAlert, at least three of these tokens belong to the honeypot type. This is a tactic used by anonymous attackers to trick users into sending ETH into a smart contract, taking control, and draining funds.

The security company’s analysis also reflects that at least two BINGCHATGPT tokens have evaporated nearly 100% of their value, and most of the other tokens are trending downward. This phenomenon is often found in pump-dump or rug pull models, where fraudsters inflate prices and drain liquidity or sell all tokens to unsuspecting investors.

According to a Chainalysis survey, cybercriminals took nearly $3.8 billion from crypto investors last year. From September 2020 to December 2022, Solidus Labs estimated that over 200,000 fraudulent tokens were created, leading to more than 2 million users becoming victims of rug pull and scam schemes.

With the AI craze following Microsoft’s $10 billion investment in OpenAI’s ChatGPT, users need to be extremely cautious when investing in any project related to this field.

Investors should do their due diligence and thoroughly research projects before investing in any AI-related token. They should also be wary of red flags such as guarantees of huge returns or tokens with little information available. As the market continues to evolve, it is crucial to remain vigilant and stay informed to protect yourself from falling prey to fraudulent schemes.

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