Phishing Scams in Cryptocurrency: Red Flags to Watch

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Cryptocurrency has completely changed the financial industry. Instead of a single trustworthy third party, it offers a decentralized way to transfer value. But as the number of users for digital assets increases, so does the amount of criminals looking to exploit the vulnerabilities found in the ecosystem. One of the biggest threats that crypto users face is social engineering attacks, particularly phishing. During such attacks, criminals gain sensitive information or steal funds by impersonating legitimate entities.

One key difference between crypto and normal transactions is that crypto transfers are non-reversible. This makes phishing especially painful for victims since any transferred funds are not able to be recovered. Everyone that interacts with cryptocurrencies, whether they are investors, traders or just starting out, must be wary of such scams for they can result in loss of funds.

In order to prevent potential loss of funds, it is important to know how phishing attacks are conducted and what are the signs to look out for. The aim of this paper is to point out key signs of fraud in cryptocurrency and its services and also explain how users should face this ever increasing threat.

Impersonation of Legitimate Platform

One of the popular phishing canvas is cybercriminals impersonating trusted cryptocurrency platforms including exchanges, wallets or the DeFi applications. These scams tend to be started by emails or messages or ads that lead people to misleading pages which are made close of the original pages of the website.

Fake sites and pages usually urge customers to supply them with critical data such as their private keys, credentials or two-factor authentications codes. Once the attackers have this data, all the funds owned by a victim will be under their control. One warning to watch out for is a communication that wasn’t expected, like advising about urgent issues that were discerned and basing them on some form of action like verifying an account, resetting one’s password, or claiming the reward.

In order not to get caught in such traps, make sure to look into the website details. Legitimate platforms only utilize encrypted communication with the use of the HTTPS protocol and the URL is universal for all communications. Sweep the official websites and do not for any reason click on links sent via unsolicited emails or messages. If in doubt, contact the platform directly through their verified support channels.

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Fake Airdrops and Giveaways

The desire to get something for free has become a convenient excuse for scammers who set up fake airdrops and giveaways as part of phishing scams. They somehow impersonate such entities on social media: crypto influencers, crypto projects, even mega companies. They promise huge payouts for something as minute as a ‘registration fee’ or they tell the victims to send money first, and then they will receive something far better in return.

For example, attackers could open a Twitter account under some prominent name such as Elon Musk, or the CEO of Binance, and then claim to run giveaways. The victims are told to send their crypto to a certain address in order to receive double the crypto than they sent. Sadly after sending it, nothing is heard from the scammers again.

Any request to send cryptocurrencies as part of the giveaway is the number one red flag. Other notable projects that offer airdrops or other rewards don’t ask people to pay first. Before such offers are accepted, verify them on the official website of the project or in the community channels.

Fake Apps and Borrowed Wallets

Another popular tactic among criminals is fake cryptocurrency wallets or apps. Malicious actors create bogus applications pretending to be well-known wallets such as MetaMask and Trust Wallet. After being installed, the applications capture seed phrases or private keys allowing the attackers to control the user’s funds entirely.

What to be wary of are apps that aren't on any verified download sites, apps with odd punctuation or spelling in the description, apps that have a higher number of sketchy reviews than downloads, and phishing emails or ads that persuade people to download fake wallet software via links to malicious websites.

To be prepared against this threat, only acquire wallets or apps from credible platforms such as Google Play Store, Apple App Store, or the official webpage of the project. Often verify the name of the person who created the wallet and the feedback provided about their work. Be suspicious of any email or message which encourages you to download an application, particularly if it has links to external sites embedded in it.

Social Engineering on Messaging Platforms

Another sector that is infested by phishing scams is instant messaging, for example Telegram, Discord or WhatsApp. Scammers tend to join groups that revolve around cryptocurrency and impersonate admins, moderators or support representatives of well known platforms. They lure in users claiming that they can offer assistance with problems concerning the account or respond to the users with direct messages.

For example, one of the scammers as a matter of practice sends a private message requesting the wallet credentials, private key or other sensitive information on the sighted issue of solving the problem. Phrases used in those interactions that raises your suspicions would include unsolicited direct messages, addresses using generic words ‘hi’ to the direct message sent without mentioning any concerns, in addition even promises to difficult problems being solved instantly.

Never forget to remind yourself that such support staff in reality will never request private keys or passwords this way avoiding to be a victim of such scams. Do not trust anyone who claims to represent a platform, as the first thing that should come to mind is verification and never bring up sensitive information in private chats that have not been verified.

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Conclusion

Investment and users alike are still under the scraping threat of phishing sites in Cryptocurrency. It is important to highlight specific threats which include phishing pagers, scamming assistive technology or apps, giveaways that are exceptionally too good and seeking information personally via social engineering. As long as the users remember to confirm the sources of their communication, take care and stay updated, the chances of them being scammed tend to lower. In light of the new developments in the crypto environment, it can be asserted that being cautious and well informed are the best ways to keep your bearing.