A cryptocurrency is a form of digital currency that is maintain and manage by a decentralized system. It is a digital payment option that does not require the government or a bank to verify the transactions. Instead, cryptocurrencies depend upon a decentralized system comprising miners who validate the transactions. A decentralized authority is responsible for maintaining all the records related to the digital currency and issuing a new crypto unit. The concept of “cryptocurrency” is named after encryption, as cryptocurrency’s security determined by encryption algorithms. Though people treat digital currencies as an investment option, these can also used to buy things on a regular basis.
Sorts of Cryptocurrency Scams
As an investment option, people are opting for cryptocurrencies more frequently nowadays. Unfortunately, the non-involvement of banks or third-party, and a lack of regulation deteriorate the security of cryptocurrencies. To avoid security breaches while investing with Cryptocurrency, investors should always be informed about all kinds of cryptocurrency scams. Some of the cryptocurrency scams are discussed here,
Phishing Scam:
The phishing scam is one of the scams that now has become a common method of perpetrating fraudulence. In this scam, scammers use emails to fool cryptocurrency investors and steal coins. They send emails to the victims providing them with malicious links and sometimes PDFs. These links redirect them to fake websites that ask them to provide their personal information or compromise the system directly, and thus cryptocurrency perpetrators garner personal information to get access to their digital wallets.
Impersonating Government Agencies:
As the decentralized system is responsible for maintaining, managing, mining, and issuing cryptocurrencies, and the centralized system has nothing to do with it, we can say that the calls you receive from government agencies asking for personal information related to your crypto wallet are illegitimate. Scammers often pose as government agencies and fool investors. For example, they might say that your wallet is prone to hacked, and they want your information in order to safeguard it.
Illegitimate Websites:
Cryptocurrency fraudsters often resort to fraudulent websites and fool people by using the domain names of original websites with slight changes. These illegitimate online trading platforms posing as legitimate websites try to garner investors’ personal information, relating to their cryptocurrency wallets. Once they gain access to the victims’ digital currencies, they disappear without delay.
Pump and Dump Scam:
Pump and Dump is a widespread scheme that stock market perpetrators frequently use to fool people. In this scheme, scammers buy digital currencies in huge numbers and pump the price of the digital currency resulting in a price rise. Once the price hikes, they sell them at a higher price and create a huge profit. Sometimes they even spread false news in order to inflate the price.
Investment Recovery Scam:
Many cryptocurrency investors, as well as stock investors, lose money while investing. As a result, a lot of investment recovery companies have occurred that offer to recover the money investors lose. Unfortunately, investment fraudsters often take advantage of the recession. Scammers posing as an agent of an investment recovery company contact and promise these investors that they will help them get back their money and demand payments in advance. On receiving the payment they run away with the money they collect from the imprudent investors.
Affinity Fraudulence:
Sometimes scammers are involved with associations that are dedicated to a specific aspect or notion, or those who share common characteristics, race, or religion. Scammers who disguise themselves as one of them try to garner their trust. They often set the association’s leader as their target as they believe that manipulating the followers will get easier if they can manage to manipulate the leader.
Fake Job Offers:
Cryptocurrency scammers sometimes offer jobs to people disguised as an agent of a company that deals with cryptocurrency maintenance. They provide job roles to them and ask for money upfront, while in the process of recruitment. Sometimes they demand payments in Cryptocurrency. Companies that ask for employment charges are likely to be fake, as legitimate companies do not require advance payment for the recruitment process.
Extortion Scam:
An extortion scam is a form of blackmail. In this scam, scammers contact the victim and lie that they have a record of their sensitive information. Sensitive information such as a record of victims’ visits to adult websites, etc. They threaten the victims to expose this information and thus extort their private data, money or crypto holdings.
How Lazarus Group Stole $620 Million From Axie Infinity Via Phishing Scam?
Axie Infinity is a ‘play and earn’ game where players are rewarded with money in the form of Cryptocurrency on winning. In the game, players need to buy non-fungible tokens, popularly known as NFT, to start playing. The game runs on the Ronin network system, an Ethereum-based sidechain. The Axie Infinity scam occurred when hackers compromised the Ronin blockchain.
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The scam initiated when hackers who poses as a legitimate company lured one of their senior engineers to apply for a job. These scammers encouraged him to attend several interviews and eventually sent an offer letter in the form of a PDF. The cybercriminals made sure that the PDF was downloaded to the company’s computer. As soon as the spyware containing PDF was downloaded on the computer, the Ronin network system was compromised, and hackers gained access to five of their nine validator nodes. These validator nodes are responsible for verifying and managing transactions. The perpetrators got access to the fifth node through a decentralized autonomous organisation, Axie DAO. The developer was involved in reinforcing the Axie Infinity ecosystem in November when the game was at the height of its popularity, and the user load was immense. The organization managed a large number of transactions at the time, but the developer of Ronin Network, Sky Mavis, did not remove the access to the fund when it was no longer needed. Access to five validator nodes allowed the hackers to make fake withdrawals. Scammers stole approximately two million Ethereum and twenty-five million USD coins, worth approximately $600 million in contemporary times.
Since then, as a countermeasure, Axie Infinity has decided to increase the number of validator nodes to 100.
