Ask the Orb: Phishing and similar scams
Today, many people are concerned about the volatile status of the cryptocurrency market and its influence on the future of trade. As ordinary investors, speculators, and all sorts of institutional investors continue to devote their attention to the lucrative cryptocurrency markets, so do fraudsters and cheaters.
According to the Federal Trade Commission’s (FTC) Consumer Sentinel, between October 2020 and March 31, 2021, approximately 7,000 consumers reported losses totaling more than $80 million. These data indicate a 12-fold increase in the number of reports over the same time last year, as well as a roughly 1,000% increase in reported losses.
Given the exponential surge in reported crypto scams, it is more vital than ever to be aware of the main sorts of scams and what kinds of things you can do to protect yourself from being duped.
Also Read: Reading between the charts
Types of Cryptocurrency Scams
In general, bitcoin frauds are classified into two types:
1. Attempts to get access to a target’s digital wallet or login credentials. This implies that scammers attempt to get information that will provide them access to a digital wallet or other sorts of confidential information, such as security codes. In certain circumstances, this includes direct hardware access.
2. Directly transferring bitcoin to a fraudster as a result of impersonation, false investment or business offers, or other nefarious tactics.
Scams Using Social Engineering
Scammers utilize psychological manipulation and deception to get control of key information pertaining to user accounts in social engineering schemes. These sorts of scams lead victims to believe they are interacting with a reputable body, such as a government agency, well-known company, tech support, a community member, a work colleague, or a friend.
Scammers may frequently work from any angle or spend as much time as necessary to acquire the confidence of a potential victim in order for them to give sensitive information or send money to the scammer’s digital wallet. When one of these trustworthy contacts requests bitcoin for whatever reason, it is frequently an indication of fraud.
Scams involving romantic relationships
Scammers frequently use dating websites to trick naïve victims into thinking they are genuine long-term relationships. When confidence is established, discussions frequently move to lucrative cryptocurrency prospects and the ultimate transfer of either money or account authentication keys. Around 20% of the money allegedly lost in romance scams was in cryptocurrency.
Imposter and Giveaway Scams
Scammers also try to appear as prominent celebrities, businesses, or cryptocurrency influencers as they go down the sphere of influence. In what is known as a giveaway scam, several scammers promise to match or multiply the cryptocurrency transferred to them to attract potential victims’ attention.
A well-crafted message from what seems to be a legitimate social media account can frequently establish a feeling of legitimacy and ignite a sense of urgency. This illusory “once-in-a-lifetime” chance may entice people to transfer assets immediately with the expectation of receiving an immediate return.
For example, claims of more than $2 million in cryptocurrency were transmitted to Elon Musk impersonators in the six months before March 31, 2021. The FTC reports that 14 percent of all reported losses to imposters are now in cryptocurrency.
Phishing schemes target information related to online wallets in the context of the cryptocurrency sector. Scammers are particularly interested in crypto wallet private keys, which are the keys necessary to access funds stored in the wallet. Their operation is similar to that of many common frauds. They send an email that directs recipients to a specially designed webpage where they must submit private key information. Once the hackers have obtained this information, they will be able to steal the cryptocurrency stored in those wallets.
Blackmail and Extortion Scams
Scammers also utilize blackmail emails as a common social engineering technique. In such emails, scammers claim to have a record of the user’s visits to pornographic websites or other unlawful web pages and threaten to expose them unless they disclose private keys or transfer bitcoin to the fraudster. These are criminal extortion attempts and should be reported to a law enforcement agency such as the FBI.
DeFi Rug Pulls
DeFi Rug Pulls are the most recent sort of cryptocurrency fraud to enter the market. Decentralized finance, or DeFi, seeks to decentralize finance by eliminating financial transaction gatekeepers. It has recently been a magnet for innovation in the crypto industry.
However, the creation of DeFi systems is fraught with difficulties. Through such channels, bad actors have stolen investment monies. This strategy, known as a rug pull, has grown in popularity as DeFi protocols have grown in popularity among crypto investors looking to maximize profits by locating yield-bearing crypto products.