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Despite the many benefits attributed to cryptocurrency operation, there have been a number of ransomware attacks which have been said to be a product of these digital assets. To dive deep into these claims, Kaspersky, a Russia based cyber-security firm conducted a research, which concluded in highlighting a large spread of cryptocurrency related scams that resulted in a huge sum of money being lost to scammers. Focusing on the 2017 cryptocurrency social engineering schemes, the research revealed that cybercriminals made around 21,000 ETH, $10 million at the time the research paper was released.

The Findings

The report stated that cybercriminals trap investors through the use of mouth-watery returns as bait. Their success comes from the making of ventures just as similar as the legit ones. The most common ones are Initial Coin Offerings and cryptocurrency giveaway scams. Many reports have already suggested that 80 percent of ICOs are a scam, and their targets are investors who are searching for big returns from the industry. “Some of the most popular targets are ICO investors, who seek to invest their money in start-ups in the hope of gaining a profit in the future”, the report states. It explains that cybercriminals create fraudulent websites and send links to targets emails. The purpose of this is to either fraud them of money or obtains their credentials using the phishing method.

The cryptocurrency giveaway scheme is usually launched through the various social media. Scammers create fake accounts in the name of renowned entrepreneurs, cryptocurrency experts, and celebrities. In this case, they convince people to send Ethereum to a given address hoping to get a larger return. Most of the social media accounts representing renowned celebrities and demanding Ethereum for higher payouts are not official handles, and this has contributed to many successful scams. The report highlighted a major weakness of human behavior which cyber-security has not been able to address: “The success criminals have enjoyed suggests that they know how to exploit the human factor, which has always been one of the weakest links in cyber-security, to capitalize on user behaviors.”

A typical example of this is a scam focusing on the Switcheo ICO, which promoted a fake ICO address on Twitter and led to a massive loss of $25,000. OmiseGo has also fallen victim to a fraudulent impersonator. Just like many other fake ICO project, the malicious party created several fake websites and enticed investors to believe in their project. After several investors sent ETH to their address, they vanished having made around $1.1 million. The internet and the emergence of cryptocurrency have created a lot of fake projects. This explains why Facebook and Twitter launched a crackdown on cryptocurrency advertisements. This cryptocurrency ban has therefore caused a higher traffic for advertisements via blockchain focused companies.

According to Nadezhda Demidova, the leading web content analyst at Kaspersky, the new fraud scheme is based on a Social Engineering Scheme. However, since it helps scammers to obtain millions of dollars, it stands out of other phishing methods.

The Russia based cyber-security firm revealed that they have employed products that have helped in chasing several fake projects from the industry. They indicated in their report that their efforts have been able to prevent about 100,000 attempted scams. Therefore the advised cryptocurrency investors and users to be cautious of the kind of cryptocurrency exchanges, wallets, and projects they engage in. It is an undeniable fact that scammers always employ new methods to trap investors, but it is always advisable to be cautious of the kind of links people click on to avoid falling for a phishing method.

Another reason for the high amount of cryptocurrency related scams is the rise in value. Even though their market value has fallen since the first quarter of 2018, they are still enjoying a high value compared to the last years. The desire to possess these cryptocurrencies has led to the use of fraudulent ventures. Also, the majority of the ICOs are not formally regulated, and they exist on few checks and balances. The report is meant to create awareness of the risk that exists in the cryptocurrency industry.


Featured Image via BigStock.

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