How Scammers Attack Crypto Users


The number of crypto scams and other "mercenary crimes, where virtual currency acts as the subject of a crime," is growing annuall...

The number of crypto scams and other "mercenary crimes, where virtual currency acts as the subject of a crime," is growing annually in Russia by 400%, according to the  Ministry of Internal Affairs of the Russian Federation, writes RBC Crypto.

As the reason, the ministry points to the unclear legal status of digital assets, the anonymity of counterparties, difficulties in tracking, and the impossibility of classifying cryptocurrency as objects of civil rights.

There are several of the most common schemes and techniques used by scammers:

  1. Pyramid with MLM elements. For example, the One Coin project is a cryptocurrency that did not have its own blockchain, but attracted € 4 billion in investments over the three years of its existence;

  2. Distribution of gifts (from the English "giveaway"). As part of this fraud scheme, users are offered to send cryptocurrency to a specific wallet and get twice as much back. This is usually done on behalf of famous people, for example, the head of Tesla and SpaceX Elon Musk or the creator of Ethereum Vitalik Buterin. For this, fake accounts are created on social networks, such as Twitter, Telegram, Facebook;

  3. The promise of quick earnings. Fraudsters lure their victims with easy money, quick and/or large income without heavy labor costs. At the same time, in order to make a profit, it is often necessary to first send money to fraudsters;

  4. A romantic scum (romance scum) - making personal connections with the victim, followed by an offer to invest in some crypto project.

A combination of schemes is often used: the scammer met the Parisian Nabil Aluani on Linkedin, gained confidence in him, thanks to which Aluani earned "the fastest $ 50 in his life", allegedly on cryptocurrency trading. Then Aulani took all of his savings and ended up losing $ 78,000.

A resident of Penza faced a similar situation: he received an invitation on the VKontakte social network to take part in trading on a cryptocurrency exchange and invested 3.5 million rubles in bitcoin. When the bitcoin rate began to fall, the man wanted to withdraw his money - but the site turned out to be fraudulent. A criminal case was initiated under Part 4 of Art. 159 of the Criminal Code of the Russian Federation "fraud", criminals face 10 years in prison.

Engagement channels

Users regularly lose money on phishing sites. Fake Internet resources look almost exactly like the real site of a real project, but they have almost imperceptible differences. For example, the difference can be in one letter or punctuation mark. For example, an employee of a dental clinic in Volgograd lost more than 3 million rubles on a phishing site of a crypto exchange.

A separate scam is fake mobile apps available for download through Google Play and the App Store. They look almost like the real thing but may differ slightly in the logo. Fake mobile apps have been found for crypto exchanges Gemini, Bitwala, Kraken, Binance, BitcoinHK, Bittrex, BitFlyer and TDBank.

This year, scammers often impersonate Elon Musk. For example, a German citizen lost ₤ 400 thousand ($ 560 thousand) on the "distribution of gifts" on behalf of Elon Musk: on Twitter, on behalf of a businessman, the scammers promised to double bitcoins if a person had time to transfer them to the specified account before a certain time.

Julie Bushnell, a teacher from Brighton (UK), fell into the same scheme: an announcement that Musk would double all his money was posted on the fake BBC News website. Bushnell invested everything that she saved to buy a house - ₤ 9 thousand. According to the US Federal Trade Commission (FTC), over the past six months, Elon Musk's imitators have stolen at least $ 2 million.

According to data published by the FTC, the number of cryptocurrency scammers has risen sharply since October, reaching a record level in the first quarter of 2021: 7 thousand people were affected, the total amount of losses exceeded $ 80 million, and the average was $ 3.25 thousand.

The number of applications from US citizens increased 12 times, the reported losses - by 1000%, compared to the same period a year earlier. According to FTC statistics, people between the ages of 20 and 49 suffer the most from investment crypto scams; over the past four years, their appeals to law enforcement agencies have increased fivefold. People over 50 loose money less often, but the amount they lose is greater.

How government agencies are trying to protect citizens

First of all, regulators fight against cryptocurrency fraud, which warns people about possible dangers. For example, in January of this year, the British regulator FCA warned that when investing in cryptocurrencies, users should be prepared to lose everything.

In July, a spokesman for the DFSA, the UAE's regulator, urged foreigners and citizens of the country to be more careful when investing in cryptocurrencies. In Russia, most of these warnings are issued by the Central Bank. In early June, he published a blacklist of companies, which included illegal financial organizations. The list included several organizations conducting operations with cryptocurrencies, in which the regulator saw “signs of financial pyramids,” including MMM Bitcoin and Fumiko.

Analytics companies such as Whale Alert seek to track scammers. According to the service, in January-March 2021, fraudsters earned more than $ 18 million through the "giving out" scheme, which is $ 2 million more than in the whole of 2020.

How to protect yourself from cryptocurrency fraud

Any offer to send cryptocurrency to an unknown or suspicious organization, or to an individual, is most likely fraudulent. Likewise, with great distrust, it is worth referring to messages with various "generous offers" coming to the mail, messengers, and social networks.

In order not to get caught on phishing sites, you need to use only verified links. It is worth remembering that any fixed and guaranteed return is a characteristic feature of a dubious financial institution.

Fraudsters take advantage of people's ignorance, as there are always many newcomers to the crypto market. Therefore, first of all, in order to protect yourself from fraud, you need to improve your financial literacy and understand how the blockchain industry works.


Cryptocurrency Magazine - Crypto Market Updates: How Scammers Attack Crypto Users
How Scammers Attack Crypto Users
Cryptocurrency Magazine - Crypto Market Updates
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