Ryan has been self-employed for 15 years. He works long hours on two small manufacturing businesses. But he finds time to daydream about getting in early on a cryptocurrency that goes to the moon.

In 2021, the price of Dogecoin, a crypto token started as a joke, increased 70-fold in the span of four months. The total value of the coins in circulation reached $70 billion. “Imagine being one of the early adopters of Dogecoin,” says Ryan.

The Dogecoin format has been riffed upon by hundreds of copycat memecoins. They serve no purpose and promise no innovation, yet a few have charted a similarly precipitous rise in price. Ryan, who asked to be identified by only first name so he could speak about financial matters, invests in new memecoins as a form of “entertainment,” he says, careful never to spend more than he can afford to lose. But he’s in it for a shot at riches, too.

The market for memecoins—predicated on the idea that anyone can become wealthy, if only they are quick enough off the mark—has created a window of opportunity for scam artists. The scams come in different flavors, but lately, playing on the desire among investors to get in before the crowd, scammers have taken to advertising early-bird rates for those that buy in before a token is released.

The number of memetoken presales increased fivefold between February and March, when the price of bitcoin surged to record heights, data provided by crypto security company Blockaid shows. A third of the 369 presales in March alone were identified as scams by Blockaid. “Scammers try to feed on the FOMO,” says Blockaid cofounder Ido Ben-Natan.

Earlier this year, Ryan was casting about for a new investment. He put $750 into the presale of a token named Rebel Satoshi. The website was dressed with charming artwork, investors could pay by credit card, and an apparent press release about it had appeared on Yahoo Finance, all of which gave him confidence in the token’s legitimacy, at least at first. “It wasn’t long before I started having doubts,” says Ryan.

Before the token was set to be released, claims Ryan, the developers behind Rebel Satoshi changed the rules. While investors were first promised their full allocation prior to launch, it would now be meted out in increments every Monday over a period of eight weeks. Each of those transactions had an associated fee, which could now cumulatively exceed the total value of a small investor’s stake. Ryan speculates that the developers had sold more tokens in the presale than they intended to issue, and were therefore trying to prevent some people from claiming their share. He began to investigate.

Within days of the Rebel Satoshi’s March launch, its price had collapsed by 65 percent. The Rebel Satoshi social accounts began to advertise a different token, now available for early purchase. Investors started to speculate the whole thing might be a scam. On a Discord channel for the coin’s investors, legitimate queries were buried under a pile of spam. When Ryan started asking pointed questions, he was banned by the moderators. In a marketing email sent in February, Rebel Satoshi claimed to have entered into a “groundbreaking partnership” with crypto exchange BingX. But in an email message seen by WIRED, the exchange told Ryan there was no such partnership.

An analysis performed on behalf of WIRED by crypto auditing company Hacken identified red flags in the token’s underlying code that might in some circumstances betray a scam. Those included the absence of a function that prevents the issuer from stealing away with the pool of tokens set aside to make trading on the secondary market possible, among others.

Suspecting he has fallen victim to a scam, Ryan has tried to warn others away. “While $750 is a lot to lose, it wouldn’t be the end of me,” he says. “But I feel bad for those that really lost.”

WIRED did not receive a response to a request for comment sent to email aliases listed on the Rebel Satoshi website.

The type of swindle Ryan suspects he has been caught in is known as a token presale scam. The format has been around for a while, but amid the FOMO that comes with skyrocketing cryptocurrency prices, people are particularly vulnerable. “These scams are broadly correlated to recent events,” says Ben-Natan. “They aren’t new phenomena, but they resurface.”

There are variations on the theme, explains Ben-Natan, but the scams tend to pull from the same playbook. Typically, the developers—who remain anonymous—invest in glossy social media marketing and paid-for placements in crypto media outlets, advertising their token as the next hit memecoin and promising a discount to presale investors. In some cases, the token never materializes and the scammers make off with the funds. In others, the scammers abandon the project after selling off their own token holdings, or fail to deliver on the promise of long-term support.

In the latter scenario, as with Rebel Satoshi, the line between a scam and an unsuccessful project is not always clear. And occasionally, because of the large sums of money involved, “something that wasn’t a scam initially can later transform into a scam,” says Ben-Natan. “As time passes, the line can become blurrier.”

In large part, these scams are conducted by sophisticated cybercriminal groups, says Ben-Natan, not lone actors. A “microeconomy” has formed around them, he says, whereby separate parties might be responsible for managing different elements of the charade, from the marketing campaign to the website design, and so on. The largest of these operations can rake in hundreds of millions of dollars. “The numbers are staggering,” says Ben-Natan.

For anybody willing to look for them, the warning signs are there, says Dyma Budorin, cofounder of Hacken. It is straightforward to check whether the creators have revealed their identities, for example, or whether a system is in place that prevents them from dumping their holdings without warning. But in their eagerness to enter into new projects early, few investors bother with due diligence. “It all comes from greediness,” says Budorin.

In extreme cases, profit-hungry investors have taken to using “sniping bots” to automatically purchase tokens as they first begin to trade on the open market, says Budorin, in a bid to get in early. Others are engaging in copy-trading, a process whereby they blindly replicate someone else’s trades, so they don’t have to do their own research. Both techniques increase the likelihood someone is exposed to a scam.

As bad as the memecoin-based scams have gotten, there’s plenty of room still for growth. “The people buying this stuff are mostly people already in the industry,” says Budorin. Presale events are marketed in niche circles, and most new tokens aren’t traded at launch on mainstream crypto platforms. But as newcomers are drawn into the cryptosphere by the run-up in the price of mainstream tokens, like bitcoin, the pool of potential victims will expand.

One way to guard against these scams, says Budorin, would be to establish an industry-wide standard for new crypto tokens, mandating features in the code that prevent developers from abusing their control over large amounts of the token. In theory, provided someone were able to persuade exchanges and other stakeholders to adopt the new standard in unison, any tokens that diverged could be readily identified and blacklisted. “It could be fixed relatively easily with a standard,” says Budorin.

But in the meantime, investors hunting for outsize returns will continue to risk buying into freshly minted memecoins. Ryan admits to partial responsibility for having potentially lost his money to a scam. “Looking back, I can barely blame them. I should have known better. There were plenty of flags,” he says. Yet the incident has not dampened his enthusiasm for memecoin investing.

“There are other tokens out there with a lot of potential, so I think I will continue putting money toward them, and stay away from the sketchy stuff,” says Ryan. “I’m not going to let it stop me.”