Home / Education / Crypto / Security / What Is A Crypto Phishing Scam And How Can You Spot One?
Security
8 min read
easy

What Is A Crypto Phishing Scam And How Can You Spot One?

Last Updated March 4, 2024 3:02 PM
Andrew Kamsky
Last Updated March 4, 2024 3:02 PM

Key Takeaways

  • Crypto phishing scams exploit deception to steal sensitive info like wallet passwords and private keys.
  • To avoid phishing scams, individuals should always scrutinize offers and not fall prey to unrealistic promises of high returns.
  • By adopting strong security practices like unique, strong passwords and two-factor authentication to safeguard accounts, it becomes much harder for a hacker to steal funds.
  • Phishing scams exploit through fakeICOs, fake wallets, and “free money” investment schemes, causing significant losses to investors after stealing sensitive information.

What Are Crypto Phishing Scams?

A crypto phishing scam involves fraudsters impersonating themselves as genuine cryptocurrency platforms or services. They deceive individuals into providing sensitive details such as wallet passwords or private keys. Phishing trickery can lead to unauthorized access of an individual’s wallet or credit card details which results in a subsequent loss of cryptocurrency assets.

Falling for such scams could lead to a high risk of financial loss. Normally the scam promises a get rich quick scheme, which tends to affect young adults who are eager to increase their income and hence make for easy targets by fraudsters. This trend underscores the pressing need for better awareness and education to differentiate genuine crypto investment opportunities from scams.

Examples Of Crypto Phishing Attacks

The evolution of phishing scams illustrates the lengths to which scammers will go to exploit unsuspecting individuals. Here are a few examples of common attacks:

Initial Coin Offerings

Initial coin offerings (ICOs) can serve as a breeding ground for scams, where a company provides false information or intentions about its project to attract investors. The fake ICO then collects money from victims and keeps the raised funds

Many scammers promote fraudulent ICOs with the allure of groundbreaking technology and guaranteed returns, leading to substantial financial losses for unsuspecting investors.

Fake Wallets

Fake wallets and hardware crypto wallet phishing are concerns where illegitimate wallet apps or services are designed to steal users’ sensitive information and funds.

Unsuspecting users download and use these wallets, only to find their cryptocurrencies siphoned off by scammers exploiting the stored private keys or recovery phrases.

Investing With “Free Money”

Another prevalent scam is the promise of investing with “free money,” where scammers allure individuals with guarantees of high returns on investments made using seemingly free or bonus funds.

These scams typically involve complex conditions and clauses, which result in the users being unable to withdraw their profits or initial investments, leading to considerable losses.

Bitcoin Stealing Malware

The world of cryptocurrency is also overdriven with Bitcoin-stealing malware, which infiltrates systems to steal Bitcoin wallet credentials.This malicious software often identifies and transmits wallet details or private keys to scammers, enabling unauthorized transactions.

Crypto Giveaway Phishing Scams On Social Media

Twitter, Instagram, and TikTok are hotspots for fraudulent phishing crypto schemes. Despite the proactive measures undertaken by these platforms, they remain strong areas full with bot scams championing counterfeit cryptocurrency initiatives.

One common scam is the giveaway scam, which involves fraudsters who promise to double or even triple the amount of cryptocurrency sent to them. These schemes are designed to trick individuals into transferring their funds to the scammers, leading to monetary losses.

Techniques To Spot A Crypto Phishing Scam 

Whilst it can be sometimes difficult to see a scam for what it is here are some key points to uncover whether one is being targeted by a phishing scam: 

Promise of High Returns With No Risk

The allure of unrealistic gains on investments is a common tactic employed by scammers to entice unsuspecting investors. By projecting high returns, they play on the investor’s desire and greed for easy and quick wealth accumulation, obscuring the high risks involved with overhyped rewards. 

Individuals should be vigilant when astronomical returns are promised or guaranteed. 

Offering Misleading Details

Scammers frequently use complex and convoluted language to provide misleading details about the investment. This intricate jargon serves to confuse potential investors, making it difficult to discern the legitimacy and the actual value proposition of the offering, and often leads to misunderstanding the inherent risks.

No Information Or Poor Communication

A lack of transparent information or subpar communication is another red flag. Scammers typically avoid answering queries or do so inadequately, providing vague or ambiguous responses. The absence of a responsive helpdesk or customer service further complicates investors’ attempts to gain clear insights, creating an environment ripe for fraudulent activities.

Fake Team Members

Some scams go to the extent of fabricating team members and their credentials to bolster credibility. A bit of due diligence often reveals the non-existence of these members or their misrepresented roles and qualifications. Fraudulently quoted team members can deceive investors into trusting non-existent or highly exaggerated expertise, leading to misplaced faith in the investment opportunity.

Fake Browser Extensions

Cybercriminals often target browser extensions for wallets like MetaMask to steal user wallet login information through deceptive extensions. 

Phishing Bots

Bots, automated computer programs, can act as agents performing tasks ranging from lawful actions, like gathering content for search engines, to nefarious ones, like draining funds from crypto users’ accounts.

Case Studies Of Famous Crypto Phishing Scams

BitConnect

BitConnect, known as a lending and exchange platform, promised substantial profits, through a lending program where users would exchange Bitcoin for BitConnect tokens. However, it was subsequently exposed as a sham and collapsed, causing substantial financial damage to its users. 

BitConnect was operating as a Ponzi scheme and the founder of BitConnect was charged with conducting a worldwide Ponzi scheme valued at $2.4 billion. This incident is recorded as the most extensive crypto scam in history.

Squid Token Scam

The SQUID token, which was inspired by the popular Netflix series, Squid Game, was promoted as a token granting access to a play-to-earn game. Despite having no official affiliation with the series Squid Game, the Netflix connection gave the token legitimacy, attracting fans of the series to invest. 

After the hype investors discovered they were unable to sell their SQUID tokens resulting in a SQUID  token crash in price, amounting to losses equivalent to $3.36 million shared amongst investors.

Preventative Measures To Avoid Crypto Phishing Scams

Use Strong Passwords

Over 80% of account hacks  are a result of weak or stolen passwords. A long combination of characters, numbers and symbols is best to keep your accounts secure.

Use Unique Passwords For Everything

Using unique passwords for each account is crucial as even a strong password can be compromised in a data breach

Use Two Factor Authentication

Using Two-Factor Authentication (2FA)  provides an additional security factor for your online accounts so that knowing your password alone (something you know) is not enough to access an account.

Don’t Give Out Private Keys

Never, for any reason, share the private keys of a wallet.

Don’t Take Screenshots Of Seed Phrases/Private keys

By screenshotting a seed phrase or the private keys, one risks syncing them to the cloud and potentially making them accessible to hackers. Obtaining private keys from the cloud is a common attack vector for hackers.

Use A Hardware Wallet

A hardware wallet provides offline storage for private keys. They are considered the most secure wallet option for storing the private keys.

Ignore Suspicious Emails

Never open links or attachments from unfamiliar email addresses and avoid disclosing personal information or passwords to anyone. Individuals should delete emails received from unknown senders.

How To Report Cryptocurrency Scams

If an individual suspects that they are being targeted by fraudsters that person may report this cryptocurrency scam to:

Conclusion

In conclusion, phishing stands as one cybersecurity concern, impacting users universally, irrespective of their technological know-how or the level of vigilance they uphold. The progression in sophistication of these attacks is on the rise, targeting victims from all backgrounds each susceptible to losses if they are successfully targeted. 

While those who are most vulnerable to attacks are found to be younger individuals exhibiting higher risk tolerance and a propensity for impulsive decision-making, there is a risk of anybody falling prey to phishing attacks. For this reason it is important to be aware and on the lookout for suspicious online activity when it comes in one’s direction. 

FAQs

What is a crypto phishing scam? 

Crypto phishing scams exploit technical deceit and social engineering to manipulate individuals into divulging sensitive information, typically via seemingly legitimate, malicious emails and links.

Who are the primary targets of phishing attacks? 

While anyone can be targeted, younger adults are particularly vulnerable due to their higher risk tolerance and impulsive behaviors.

What are the best practices to prevent phishing attacks? 

Individuals should scrutinize emails, avoid unverified links, and never download suspicious attachments.

What are the common techniques of crypto phishing scams? 

Common techniques include promising high, risk-free returns, offering misleading details, displaying fake team members, and creating fake browser extensions and bots to steal sensitive information.

Was this Article helpful? Yes No