The Evolution of Crypto Market Fraud


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The crypto market doesn’t standstill. Every day, developers launch new technologies, and users gain experience. However, there is an unspoken rule of a rapidly developing industry: the more money is concentrated in it, the more scammers intend to cash in on it.

Interestingly, the fight against unscrupulous guys is almost impossible to get ahead of the curve. For this reason, you must always be aware of new fraudulent schemes so as not to be hooked by another person who wants to get access to your assets.

Surely, you know about the classic hackers’ tricks – wallet hacking, phishing, cryptojacking, but not only the industry develops every year. Today, scammers have mastered new methods to capture your funds. So, Oleg Kiyan, CMO at​​ WhiteBIT crypto exchange, prepared wants to share his knowledge about the evolution of fraud. He also knows what tools crypto criminals use to lure as many victims as possible.

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Scammers have mastered deepfake

Posing as another person isn’t a new scheme. But if earlier it was limited to emails and calls, now scammers have mastered deepfake and can deceive even an experienced user through a video call.

For example, scammers can create videos with fragments of speeches and interviews from popular industry figures. Then it’s a matter of technology: in a live broadcast on Youtube, this video can be used to advertise some kind of scam to attract investment.

Also, technologies allow creating very realistic videos, where a celebrity supposedly pronounces the text that is beneficial to scammers. In fact, they just make a record with themselves, then they put the face of a celebrity on their face and use it for their own purposes.

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Such cases are no longer uncommon in the crypto community. Last year, “Justin Sun” tried to raise $32,000 from the uPlexa project. Moreover, it was done through a video call via Skype. The startup founder received an offer from the fake TRON founder to transfer uPlexa to the popular blockchain and list his token on multiple exchanges. For this, it was necessary to pay more than 30 thousand dollars.

It was also suspicious that “Sun” asked to sign the contract during the conversation, but the uPlexa’s creator refused.

Interestingly, not only entrepreneurs but also ordinary crypto users can become victims of such fraud. Deepfake is actively used in creating advertisements for various scams. Through interviews with a fake industry leader, untrustworthy projects raise funds without thinking about celebrity reputation or user balances.

Now you need to be extremely careful about any information and track any inaccuracies in the video. For example, a sign of using deepfake can be a delay in the sound or a mismatch between the text and facial expressions.  

How to protect yourself from those who like to introduce themselves as other people? When you receive too profitable offers, don’t rush to present important information about your project and don’t send money. It’s better to check the official sources. Influencers always write about promotions or ad campaigns on their social media. 

Fake QR-code generators

QR-code is an easy and convenient way to transfer cryptocurrency. Instead of manually entering 12-digit addresses, you can simply scan the code and complete the transaction. However, this method cannot be called safe since fraud cases with QR code substitution have become more frequent.

Fraudsters introduce malware that changes the address in the QR code to the address of their wallet. It’s almost impossible to notice this, and as a result, your assets go away and become the profits of someone else. What’s more, the crypto villains don’t stop there. They not only create a QR-code but also change the official wallet address to their own in the clipboard. Even when checking, the system will not generate an error.

MyCrypto security director Harry Denley discovered sites with fake code generators that sent victims’ coins to the scammer’s five wallets. These sites were on separate servers that hosted 450 strange resources with the keywords: “COVID-19”, “cryptocurrencies”, and “Gmail”. Moreover, some of the suspicious sites claimed to be Bitcoin accelerators. They got about 18 Bitcoins of users’ funds.

In order not to fall for a fake QR-code, check it with trusted services. Don’t use sponsored links on the first pages of Google for this purpose.

If you are still confused by the provided code, you can send just a few Satoshi and make sure that the funds reached the address of the right person.

Danger to hardware wallets

Although hardware wallets are considered the safest storage for cryptocurrencies, their owners are also in danger. Scammers use special browser extensions (usually for Google Chrome) that steal seed-phrases from users.

Last year, users of Ledger wallets faced such a scheme. The victims of the fake Ledger Live app have synchronized the extension with their wallet using their seed-phrase. Thus, their coins went to cybercriminals. Thus, they were able to get hold of over 1,4 million XRP coins.

COVID-19 is a catalyst for deception

Amid the coronavirus panic and an acute shortage of medical masks and sanitizers, scammers offered people to buy these remedies for digital assets. Then there is the classic scheme: money is received, but the goods are not sent. According to Interpol’s statement, the unscrupulous guys managed to earn more than $2 million in cryptocurrencies. 

Also, scammers did not hesitate to make money on COVID-19 using fake infection cards. Malicious sites blocked users’ devices with a Bitcoin ransom demand.

The blackmailers also scared their victims to infect them with the coronavirus if they didn’t send them cryptocurrencies.

The most apparent crypto scam associated with COVID-19 was a call for charity. Many sites have appeared on the network that, on behalf of official organizations, offer to make a digital asset donation to fight the global pandemic.

Of course, it’s impossible to completely protect yourself in the digital space, but you always need to adhere to the basic rules.

  1. Never trust projects that offer too high a return.
  2. Feel free to ask questions: Crypto experts are always enthusiastic about answering questions from their subscribers.
  3. Be extremely careful and check the information several times in several sources, one of which must be official.

Oleg KiyanCMO at​​ WhiteBIT crypto exchange.​ A creative yet data-driven marketing executive with 6+ years in digital marketing, entrepreneurial mindset and deep SEO expertise. Conceptual, analytical and hands-on strategist with expertise in leveraging market research and customer insights to create high-impact branding and marketing initiatives that drive positive ROI, revenue growth, market penetration and brand recognition. Find him on LinkedIn.

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