Here are some of the main schemes that target the world of cryptocurrencies:
Phishing
This scheme, which is very common in banking, is also used on many crypto exchanges to defraud victims and steal their confidential data. Phishing, a type of social engineering attack intended to trick victims into revealing their data, allows cybercriminals to access victims’ accounts and wallets and steal their funds.
Website Cloning
In this scheme, cybercriminals create a website that is identical to the original. It’s usually an exchange, online wallet or official ICO web site. Cybercriminals promote the cloned website through social media and networks, including emails, chats and Google ads that supplant the real website’s identity. They also include a fraudulent link through which an attacker can easily obtain a victim’s credentials. In addition to cloning websites, cybercriminals also deploy false apps that imitate the legitimate apps.
False Support
In this scenario, fraudsters deceive victims by impersonating the support team of a company’s legitimate website and sending emails to clients with the company's logo to announce an event. They ask for private data to “help” the clients, but they steal their information. It’s important to know that no platform will request a client's credentials because, among other reasons, they already have them.
Pump and Dump
This type of scam consists of inflating the price of a cryptocurrency through fraudulent or false information published in online communities, forums and social networks. Investors are encouraged to buy and hold the cryptocurrency because, according to the cybercriminals, they could make a lot of money in a short time. When the cryptocurrency reaches its peak price, the fraudsters cash in on the profits and the price begins to fall. Investors attempt to sell quickly to minimize losses. However, the asset price plummets at a dizzying speed, thus generating significant losses.
Nonexistent Projects
Under this scheme, new cryptocurrency projects appear on social networks or channels. These projects don’t really exist or are created only to make the most money as quickly as possible, and then they disappear.
ICO Launch Scams
New cryptocurrencies are usually launched in the market through an initial currency offering, also known as an ICO (Initial Coin Offering). This is a financing scheme by which a company can raise funds from high-liquidity cryptocurrencies, such as Bitcoin or Ethereum, through the massive sale of the new cryptocurrency that is about to be launched. Start-up companies sometimes launch ICOs, which raises doubts as to whether the offer is real or a scam.
Fund Flight (Exit Scams)
This is a scheme in which a platform builds trust from investors and works well for some time until the operators block withdrawals and flee with their clients’ money. Some of the seven largest Bitcoin scams in history were perpetrated using this method. Platforms aren’t always created for scams. Sometimes fraud occurs due to business problems the persons in charge are not able, or have no wish, to solve, and they go for the easy way out – take the money and run.
Fraud Mitigation for Businesses Dealing in Cryptocurrencies
