The evolving landscape of cryptocurrency scams

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Date Published

09/11/2020

Since its inception, one of cryptocurrency’s primary selling points has been its decentralized and semi-anonymous nature – but that does not mean it is entirely immune to security concerns.

As soon as bitcoin burst onto the scene in 2009, scammers began strategizing ways to deceive miners and traders into forfeiting funds, personal information, or both. The most common scams began as fairly basic methods of misdirection, but they have since evolved to become much more aggressive and difficult to sniff out – especially for novice and overzealous players.

This is exactly what we have seen in recent months as social media scams on sites like Twitter and YouTube have begun targeting users at an amplified rate. Here is a look at some of the hoaxes that have taken place and what this may mean for the future of crypto and cybersecurity.

A fake BTC giveaway makes its way to Twitter

A bitcoin scam recently took place on Twitter after several high-profile accounts were hacked and then used to promote a fake giveaway of the cryptocurrency. The giveaway promised $2,000 in bitcoin to everyone who sent $1,000 of bitcoin to a specified address. Thousands of accounts ended up taking the bait and losing a total of about $110,000 in just a few hours.

A new wave of YouTube imposters

Twitter scams are not all we have been seeing, however. In recent months, we have also seen a rapidly growing trend of YouTube scams wherein an account (with an already sizeable following) will be hacked, changed to look like another brand, and then used to publish content that drives users toward a misinformed transaction.

Here is a closer look at a few such shakedowns.

Cardano YouTube scam

In July, Cardano founder and CEO Charles Hoskinson issued a statement warning users that a YouTube account had been promoting fake giveaways of the cryptocurrency. As it turns out, the scam had amounted to $120,000 in losses during a single day in the previous month by using a one-page website, YouTube ads, and a recording of one of Hoskinson’s recent keynotes to attract takers.

Ripple YouTube scam

A similar hoax recently took place involving Ripple, with scammers hacking multiple high-profile YouTube channels and changing their names to “XRP Giveaways.” As Ripple CEO Brad Garlinghouse later noted, no such giveaway was taking place, despite users falling victim to the tune of millions in losses.

SpaceX YouTube scam

In another recent scam, victims were lured into a pyramid scheme by a YouTube account that had been renamed “SpaceX.” The imposter account offered a 200% payback to users in return for a bitcoin donation to the account.

Channels like this and others – and as we saw with the Cardano scam – reuse recorded speeches from owners (like Elon Musk) and make them appear as if they are being broadcast live on YouTube. Because the hacked accounts have significant followings, the broadcasts gain a live viewership that makes them seem more legitimate. Bots are also used to amplify views which in turn inspires victims to send money into the wrong hands.

What is next for crypto scams?

These increasingly aggressive tactics and new impersonation techniques have experts and analysts wary of the role deep-fakes – super-lifelike but fraudulent likenesses of celebrities – may soon play in the crypto landscape.

The continued insecurities of some of the world’s most popular websites also raise concerns ahead of this fall’s election, when information and influence will be flowing at an all-time high.

Blockchain as a cybersecurity solution

It is possible blockchain can serve as a solution to identify verification by removing centralized, third-party control from the equation and by putting users in charge of their own data and security. Use of a distributed ledger to verify identity would make impersonation theoretically impossible as data becomes immutable and easily verifiable.

While widespread adoption of any such solution is expected to take some time (only 10% of apps by 2023), it does help forecast what the future of cybersecurity could look like. In the meantime, it is imperative for anyone in the crypto space to educate themselves on the security features of these platforms and to take increased measures to protect account information.

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Date Published

09/11/2020

Author

First Scribe

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