Beware of such scams in the crypto market!

 Beware of such scams in the crypto market!

Since its introduction over a decade ago, Bitcoin has attracted the attention of investors and traders alike.

The cryptocurrency ecosystem is characterized by poor liquidity and few institutional investors, which is gradually changing towards widespread adoption.

The cryptocurrency ecosystem is also characterized by the presence of criminals and fraudsters.

Bitcoin scams track and work like a tide.

As Bitcoin prices rise, the number and frequency of scams increase, and more criminals use them in transactions.

While the scams decrease with the collapse of prices, and the number of transactions on the Bitcoin network decreases, the option to invest in the crypto market becomes unattractive.

The nature of the scams occurring on the Bitcoin network has also coincided with the development of its infrastructure.

Bitcoin's previous blockchain infrastructure was rudimentary, often crashing as the number of transactions on its network multiplied.

At the time, illicit activities in the Bitcoin ecosystem reflected their use cases, with the cryptocurrency mostly used for transactions such as drug purchases on the dark web.

The price hike in 2017 changed the nature of the scams that occur within the Bitcoin arena.

Initial coin offerings (ICOs) were the latest craze to enter the crypto arena, and these scams profited from mainstream news and media reports about Bitcoin.

They provided potential investors with an opportunity to invest in a new industry that promised huge returns.

What they did not mention was that such shows were largely unregulated by regulators.

In recent years, as Bitcoin has become more prevalent and attracted the attention of institutional investors, scammers have shifted their strategies to targeting cryptocurrency wallets.

For example, crypto wallet theft scams are becoming more and more common.

Phishing is a particularly popular method for hackers to steal user key information for cryptocurrency wallets.

As illogical as it may seem, Bitcoin network scams are essential to their evolution because they identify weaknesses in their system.

Here are the most popular scams targeting holders of Bitcoin and other cryptocurrencies:

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1- Hacking trading platforms and digital wallets:

Previously, cryptocurrency exchanges were the main target sources of hackers and hackers.

Now, scammers have turned their attention to other areas, such as online cryptocurrency wallets.

One of the biggest such breaches occurred in June 2020, when hackers stole 1 million customer email addresses by hacking into the email and marketing databases of French company Ledger, a company that provides hardware wallets.

They also stole the personal details of 9,500 users and posted 242,000 customer email addresses on the website of the hacked databases.

At the end of 2019, cryptocurrency exchange Poloniex suffered a similar breach and had to send an email to its users asking them to reset their passwords.

2- Social media fraud:

Social media has become an influential force.

The rise in the price of Bitcoin coincided with an increase in its visibility in the media.

Thus, it is not surprising that hackers use social media access to target Bitcoin holders.

They have resorted to creating fake social media accounts to demand bitcoins from followers or hack popular Twitter accounts directly.

Perhaps the most famous example of this happened in July 2020 when the Twitter accounts of famous individuals and companies were hacked.

The hackers then gained access to Twitter's administrative console and posted tweets from these accounts, asking their followers to send money to a specific blockchain address.

They promised to double the users' money and return it as a charitable gesture.

According to reports published at the time, 320 transactions were made within minutes of the tweets being posted.

Twitter is not the only social media platform affected by scams targeting bitcoin holders.

Video sharing platform YouTube suffered from a similar problem.

In July 2020, the Apple co-founder sued Google because his conversations about bitcoin appeared in fraudulent videos to donate to a fraudulent cryptocurrency account.

These videos also promised double crypto amounts to users who promised to send their cryptocurrency to the blockchain address mentioned in the video.

Another 17 people sued YouTube because they were deceived by the videos.

3- Social engineering tricks:

Social engineering scams are scams in which hackers use psychological manipulation and deception to gain control of vital information about users' accounts.

Phishing, for example, is a widely used social engineering scam carried out by a hacker.

Emails were sent linking their targets to a fraudulent website created specifically to obtain important details, such as bank account information and other personal details.

In the context of the cryptocurrency industry, phishing scams target information related to online wallets.

Specifically, scammers are interested in the private keys of a crypto wallet, which are the keys required to access the funds within the wallet.

Their modus operandi is similar to that of many regular scams.

Driving owners are sent an email to a specially created website asking them to enter private key information.

When hackers get this information, they can steal Bitcoin and other cryptocurrencies And the love in those wallets.

Another common social engineering method used by hackers is to send emails to blackmail Bitcoin holders.

In these emails, the hackers claim to have a record of the adult websites the user has visited and threaten to expose them unless the victim shares the private keys with them.

The best way to stay safe from scams is to avoid clicking on the links in these emails and check if the email address actually belongs to the said company by contacting them or checking the email syntax.

For example, users should check if the associated web address is encrypted (eg this site's URL starts with HTTPS which means it is secured) because visiting unsecured sites is a bad idea.

4- Targeted frauds in the decentralized finance market:

Escapes with user funds in the Defi market are the latest type of scam to hit the cryptocurrency markets.

Decentralized Finance, or Defi, aims to decentralize finance by removing intermediaries and third parties from financial transactions.

Recently, this has become a magnet for innovation in the cryptosystem.

But the development of Defi platforms has its own problems, too.

The bad actors can escape with the investors' money through these avenues.

This practice, known as rug-pulling, has become particularly prevalent as Defi protocols have become popular with crypto-investors interested in amplifying returns by chasing payoff-bearing crypto tools.

Smart contracts that lock funds for a specific period are the most common way for programmers to steal funds.

When the contract expires or reaches a predetermined cap, developers generally use programming functions to steal bitcoins from it.

In December 2020, a group of pseudonymous developers stole $750,000 worth of encapsulated Bitcoin (WBTC), Ethereum and other cryptocurrencies from Compounder Finance, a decentralized Defi finance platform.

The project promised compound returns to investors for depositing their cryptocurrency into a time-locked smart contract, or a smart contract that would only be executed after a specified time.

But the investors claim that the developers built a “backdoor” into the system and withdrew the money before the smart contract expired.