Crypto is the future. Don’t let scammers steal this from you! – End Tech

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“I’m a lot more confident with crypto than with banks or fiat because I can actually control it, and the money supply is transparent, said upfront. It makes shopping online a lot easier and a lot safer.” This statement was made by Erik Voorhees, the creator of the ShapeShift cryptocurrency exchange. , it is not without risks. And unfortunately, these risks are unknown to the average cryptocurrency buyer or investor. In today’s tech world, advancement often comes with nefarious individuals who want to take advantage of the unsuspecting buyer or internet user.

Cryptocurrency is often referred to as virtual currency or tokens and was introduced 14 years ago as an alternative to physical currency in the centralized banking system. It is run on a platform called blockchain and has an open ledger for record keeping that anyone can access. Like its physical counterpart, cryptocurrency is very susceptible to fraudsters who will try to find vulnerabilities in the system and obtain funds through illegitimate means from victims.

And as cryptocurrency grows in popularity, so does its fraud rate. According to the Web3 security report published by CertiK, a pioneering blockchain security company, and its CEO Ronghui Gu (speaking about fraud), “At $3.7 billion, 2022 is the worst year on record in terms of loss in value, far exceeding $1.32021 billion.”2 Therefore, we must take an active role in preventing fraud and providing education to those who wish to invest in cryptocurrency.

TYPES OF CRYPTO SCAMS

ROMANTIC SCAMS

Often seen in traditional banking relationships, romance scams have grown exponentially in the crypto world. Scammers will create fake online profiles and regularly include photos of attractive individuals taken from the Internet. They will study public information victims include on their social media and claim to share common interests and beliefs. Often, scammers contact victims on dating apps or via private messaging on social media platforms. Romance scams are considered “long” cons. Once the scammer has developed a relationship with the victim, he steers the conversation towards cryptocurrency and tries to convince them to send money to help the scammer after an “accident” or “family emergency.” “. Sometimes the scammer will try to sell the victim an investment opportunity. The scammer is banking on the established relationship that the victim will help him because he believes the relationship is real, despite the fact that the scammer and the victim have never met in person. The scammer will always make up the reasons why their relationship needs to stay online, such as if they work overseas, are in the military, or travel overseas for work (among other excuses). Moreover, they will always refuse to meet via Zoom or another video conferencing application.

INVESTMENT SCAMS

With the state of the economy today, everyone is looking for a way to earn a few extra bucks. Scammers take advantage of this desire by offering investment opportunities that have “guaranteed” high returns. As mentioned above, scammers will contact victims through dating apps or social media platforms, sometimes posing as love interests or investment managers. They will try to convince the victim that the investment carries little or no risk and will still bring the victim a lot of money. Some of these situations involve “pump and dump” schemes, where the scammer will try to trick the victim into buying the crypto at what they see as a “low price”, with promises that the value of the crypto will rise and produce a massive bargain. To make the asset more attractive, they often “inflate” its value and popularity in order to obtain several investments.

Scammers will also create fake exchanges and advertise cryptocurrency at below market value rates and promise big returns on their investment. All that is required will often be high introductory fees. And when the victim tries to get out of the profits they believe they have generated, the business is gone or inaccessible.3

INITIAL COIN OFFERS (ICO)

Scammers often use ICOs as a chance to get money from uneducated investors who are new to the world of crypto. The ICO is fabricated and does not include any real information, such as employee names or published white papers about the coin.

PHISHING SCAMS

Phishing is a proven fraud method that has been around for a long time, in and out of the crypto world. Scammers will attempt to obtain victims’ personal or financial details through various methods. They often contact victims electronically, sometimes posing as a legitimate business (e.g., Amazon or a financial institution), and trick them into clicking on a link, webpage, or video. There will either be malware embedded in the links and video, or the victim will be redirected to a page that is not associated with the legitimate company (but looks so much like the right page that the victim doesn’t notice the changes). The malware will steal the victim’s private keys for their crypto wallets, login credentials for exchanges or other personal information to help the scammer gain access to these platforms. Scammers can also trick the victim into sending money to their wallet, instead of a legitimate wallet they think they are using.

UPGRADE SCAMS

As technology is constantly expanding, software always needs the latest patches and updates. This also applies to cryptocurrency exchanges. During these updates, the crooks will contact the victims and try to convince them that they (the crooks acting as an exchange or platform) need your login credentials or private keys to perform the upgrade. Sometimes these scams align themselves with legitimate mergers that are well known, so victims are often less inclined to question the contact.

SIM-SWAP SCAMS

This is one of the newest scams involving cryptocurrency. The scammers contact the victim’s phone company and pretend to be them, asking for the phone number to be transferred to a new phone. They often obtain the personal information needed to impersonate the victim through a hack or a separate method. Once they are able to convince the customer service representatives to transfer the phone number to the new SIM card (controlled by the scammer), they can access the phone’s data, such as login credentials and downloaded applications (such as social media and financial). Also, since they now control the phone number, they are able to bypass any two-factor authentication requests. This allows the scammer to gain access to crypto wallets and other accounts, often resulting in the theft of assets before the victim even knows that changes have been made to their phone number and accounts.

HOW TO AVOID CRYPTO SCAMS

Always verify the sender’s email address on any communication.

Verify that the websites you visit are legitimate (eg Google.com vs. Google.com) or that there are no spelling mistakes in the web information provided to you (by the scammer).

Use bookmarks to visit your financial websites, especially crypto exchanges; do not click on links in emails to access web pages.

When working with people on social media, be sure to review their page carefully. Check how long ago the account was created and if it has a consistent history of posts and activity. Beware of brand new accounts, with little or no posts and few followers trying to sell you crypto products.

Do not believe that an investment carries no risk or may generate unreasonable returns/profits.

Beware of messages from people you don’t know or people you’ve communicated with who refuse to meet you or even make a video call.

HOW TO REPORT CRYPTO SCAMS

If you or someone you know is a victim of fraud, you can report these scams to the following people:

the FTC at ReportFraud.ftc.gov the Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint the United States Securities and Exchange Commission (SEC) at sec.gov/tcr the Internet Crime Complaint Center (IC3) at ic3 .gov/Home/FileComplain the cryptocurrency exchange company you used to send the money

FINAL COMMENTS

At Ankura, we want to do everything we can to protect consumers. We work with companies in various industries, including cryptocurrency, and have experience dealing with cases involving fraudulent actors. If you need advice or services to protect your business from the ever-changing world of fraud and security risks, we’re here for you. Do not hesitate to contact us.

Footnotes

1. https://blockonomi.com/gleec-coin-exchanges/

2. https://www.certik.com/resources/blog/2aHoafYEoeRguK2gE9fD1s-hack3d-the-web3-security-report-2022

3 https://www.forbes.com/advisor/investing/cryptocurrency/top-crypto-scams/

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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