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All you should know about Cryptocurrency Phishing

  • Vrinda Mathur
  • Mar 30, 2023
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Scammers are constantly on the lookout for new ways to steal money, and the massive growth of cryptocurrency in recent years has created numerous opportunities for fraud. According to a report by blockchain data firm Chainalysis, fraudsters stole $14 billion in cryptocurrency in 2021, setting a new record. If you're interested in cryptocurrency, you should be aware of the risks. Continue reading to learn more about common cryptocurrency scams, how to spot them, and how to avoid them.


 

What is Cryptocurrency Phishing?

 

Scams involving cryptocurrency can take many forms. Scammers, like bankers, want your cryptocurrency and will go to any length to obtain it. To protect your crypto assets, it's important to understand when and how you're being targeted, as well as what to do if you suspect a cryptocurrency or communications related to it are a scam.

 

The most basic form of cryptocurrency phishing, also known as crypto phishing, entails good old-fashioned spam mailings. In this case, such e-mails appear to be sent by providers of cryptocurrency-related services, such as Web wallets and exchanges.

 

The messages are noticeably more detailed and sophisticated than the typical phishing email. One example would be a security alert stating that someone attempted to sign into your account from such and such an address using such and such a browser — all you have to do is click the link to confirm that everything is fine. The potential victim may have even requested such messages on the crypto wallet site, in which case they will notice nothing unusual

 

Crypto phishing, like regular phishing, occurs when scammers contact potential victims and persuade them to transfer funds or provide their credentials for coin wallets. Crypto phishing can occur via email, SMS, social media, and chat.

 

One of the most well-known recent cases involved a 17-year-old Florida scammer who hacked the Twitter accounts of celebrities such as Bill Gates, Elon Musk, Barack Obama, Joe Biden, and others and used them to convince crypto investors to send him money to capitalize on a sure-fire investment - and bilked people out of $100,000 in cryptocurrency.

 

Also Read | Top 10 Anti-Phishing Tools in the Market


 

What is Phishing?

 

Phishing is the practice of sending fraudulent communications that appear to come from a trusted source. It is usually done via email. The goal is to steal sensitive data such as credit card numbers and login information or to install malware on the victim's computer. Phishing is a common type of cyber attack that everyone should be aware of to stay safe.

 

Cybercrime is simply defined as a crime committed online. In this case, the computer, network, internet, or any electronic device is used to commit a crime digitally. The primary targets of cybercrime are system users, websites, company defamation, monetary gain, and so on. Cybercriminals' activities include:

 

Infected computers and sensitive data with viruses and malware attack a computer to gain access to the target or victim's computer via a network.

 

Hacks into the victim's system and steals sensitive information from the user's data:

 

  • Obtaining unrestricted access to user accounts.

  • Creating opportunities for online scams and fraud.

  • Profit can be made by selling or locking critical data.

  • As newer technologies become available, cybercrime is on the rise. Cybercrime includes attacks such as illegal downloading.

 

Phishing is a type of online scam in which scammers pretend to be a trusted entity to trick people into disclosing sensitive information. This data can range from passwords to credit card information, or, in the case of cryptocurrency, wallet keys or exchange logins.

 

To obtain this information, the phisher could use any number of methods, including email, social media, or even phone calls. They can steal your money or commit identity theft once they have your information.

 

Some of the most common types of phishing are:

 

  1. Emails: 

 

Claiming to be from a reputable institution, such as a bank or cryptocurrency exchange, requesting you to click on a malicious link or download an attachment. These links and attachments frequently contain malware that can steal your data.


 

  1. Messages: 

 

Messages on social media from fake accounts appear to be from friends or family members. You may be asked to click on a link or download an attachment in these messages.


 

  1. Calls: 

 

Calls from someone claiming to be from a reputable organization, such as a bank or government agency. They may attempt to elicit sensitive information from you over the phone.

 

Also Read | 10 Ways to Avoid Phishing


 

How to Spot Cryptocurrency Phishing?

 

Here are some of the ways through which you can spot cryptocurrency phishing:

 

  1. Take your time:

 

Scammers frequently use high-pressure tactics to persuade you to invest your money right away, such as promising bonuses or discounts if you participate right away. Before investing any money, take your time and conduct your research.


 

  1. Be wary of social media advertisements:

 

Crypto scammers frequently promote their fraudulent schemes on social media. To create a sense of legitimacy, they may use unauthorized images of celebrities or high-profile business people, or they may promise giveaways or free cash. Maintain a healthy skepticism when you see cryptocurrency opportunities promoted on social media, and conduct your research.


 

  1. Excessive marketing:

 

Excessive marketing Crypto fraudsters, on the other hand, attract people by investing heavily in marketing - online advertising, paid influencers, offline promotion, and so on. This is intended to reach as many people as possible in the shortest amount of time - to raise money quickly. If the marketing for a crypto offering appears heavy-handed or makes extravagant claims without supporting evidence, pause and conduct additional research.


 

  1. Unidentified team members:

 

It should be possible to find out who the key people are behind most investment businesses. Typically, this entails easily accessible biographies of the people in charge of the investment, as well as an active presence on social media. Be wary if you can't figure out who is running a cryptocurrency.


 

  1. Determine Team Members:

 

White papers should always identify the cryptocurrency's members and developers. There may be instances where an open-source crypto project does not have named developers—this is common in open-source. The majority of the coding, comments, and discussions can be found on GitHub or GitLab. For discussion, some projects use forums and apps like Discord. If you can't find any of these and the white paper is riddled with errors, it's probably a scam.


 

  1. Investigate the Marketing:

 

In general, cryptocurrency is not a profitable venture. They are projects with a stated purpose that use coins or tokens to help the blockchain function. Valid crypto projects will not be promoting themselves on social media as the next best cryptocurrency that you should not miss out on.

 

You may see cryptocurrency updates about blockchain developments or new security measures implemented, but be wary of updates like "$14 million raised" or communications that appear to be more about money than about advances in the technology behind the cryptocurrency.


 

  1. Examine the White Paper:

 

Cryptocurrencies go through a process of development. Before this process, a document known as a white paper is usually made available to the public for reading. It defines the protocols and blockchain, lays out the formulas, and explains how the entire network will work. 

 

Fake cryptocurrencies do not do this—the people behind them publish "white papers" that are poorly written, have figures that do not add up, do not explain how they intend to use the money, or do not appear to be a proper white papers in general.

 

Also Read | What is Spear Phishing and How does it Work?


 

Types of Phishing in Cryptocurrency

 

The losses in crypto phishing attacks have been significant enough to draw attention. People lost more than $80 million between October 2020 and March 2021, according to the US Federal Trade Commission. Crypto investment and phishing scams are on the rise, and the only way to combat them is to identify them. When you know a scam inside and out, you can tell when you're being taken advantage of. Here are some of the most common crypto phishing attacks to be aware of:

Types of Crypto Phishing

Types of Crypto Phishing

 

  1. Spear Phishing:

 

According to a report by data protection firm Barracuda Networks, the number of spear-phishing attacks is increasing. Spear phishing attacks involve hackers sending personalized messages to specific individuals.

 

A fake email, for example, purports to be from a well-known organization or individual. The attacker's goal in such crypto phishing scams is to trick victims into disclosing sensitive information. In some cases, attackers can trick victims into clicking on links to malware-infected websites.

 

Individuals can protect themselves from crypto phishing attacks such as spear-phishing by taking the steps outlined below:

 

  • Set up two-factor authentication.
  • Avoid using unsecured Wi-Fi networks.
  • Verify sender email addresses and links carefully.
  • Verifying the senders' authenticity.
  • Avoid emails that request login information or passwords.


 

  1. Fake Browser Extensions:

 

Fake browser extensions are the second most common type of crypto attack via phishing. Crypto users use a variety of browser extensions in conjunction with MetaMask wallets or other crypto wallets. While the wallet browser extension provides convenience for crypto users, it can also be a tempting target for attackers.

 

Cybercriminals are stealing funds from users by impersonating crypto wallet browser extensions. The bogus browser extensions can aid in the theft of login credentials for the user's wallet. One such attack made headlines last year, with over 120 downloads in the Chrome Web Store. The malicious Chrome extension, dubbed Ledger Live, promoted itself with the appearance of legitimacy by utilizing Google Ads.


 

  1. DNS Exploitation:

 

The complexity of crypto phishing scams has increased dramatically in recent years. DNS hijacking is one of the most subtle scams, requiring a keen eye for detail to detect. DNS hijacking or DNS spoofing attacks, in which attackers hijack legitimate websites, are quite common. The attackers then substitute a bogus interface for a legitimate website.

 

Unsuspecting users can use their login credentials and private keys on the fake website, putting their crypto assets at risk. The most recent instance of cryptocurrency scams involving DNS hijacking involves two popular DeFi solutions. Cream Finance and PancakeSwap were victims of a DNS spoofing attack, though no specifics about the loss were provided.


 

  1. Phishing Bots:

 

The final and most intriguing entry in the list of popular crypto phishing scams is phishing bots. It is important to note that phishing bots have been used to varying degrees in the past. However, the use of phishing bots in cryptocurrency is primarily intended to compromise users' valuable seed phrases. The cryptocurrency wallet MetaMask has alerted users to a phishing attack being carried out in its name.

 

MetaMask informed users that the phishing attack was carried out by a group of phrase-stealing bots on Twitter. The phishing attack appears to be coming from an account that looks almost identical to MetaMask. The request calls for completing a support form on popular websites such as Google Sheets or contacting the users. 


 

Conclusion

 

The final summary of the discussion on "How to Avoid Crypto Phishing Attacks" emphasizes the importance of due diligence. When it comes to handling crypto transactions, crypto users must be more vigilant than ever. Simultaneously, you must be on the lookout for any suspicious emails, text messages, or links on your devices. A closer examination of each phishing attack in the crypto domain may help you identify the threat before it causes any problems.

 

Cryptocurrencies are gradually expanding beyond the traditional boundaries of financial applications into a wide range of other applications. Safety from common phishing attacks will not only protect your assets but will also foster trust in the crypto space. With this, you can learn more about blockchain security and cryptocurrency security.

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