Virtual currency scams are like a box of chocolates, you never know what you're going to get.
With the rise of virtual currency, some fraud gangs have begun to use virtual currency to transfer and launder stolen money, which has brought great losses to the country and caused some victims to suffer deeply. In recent years, the wealth accumulation effect of digital currency has made the popularity of virtual currency continue to rise. Fraudsters have begun to absorb funds under various banners, such as obtaining ten times and hundreds of times of income, getting rich overnight, etc., seriously damaging the property safety of the people and disrupting the financial economy. order.
Analysis of the Current Situation of Virtual Currency Fraud
Cryptocurrency scammers stole more than $7.8 billion in 2020, and that figure doubled in 2021, as scammers stole more than $14 billion worth of cryptocurrency in the past year. New types of cryptocurrency scams are popping up every day, and if you're not careful, you could be the next victim.
According to a recent FTC (Federal Trade Commission) report, since the beginning of 2021, more than 46,000 people said they lost more than $1 billion in cryptocurrencies to scams. Last year's losses were nearly 60 times greater than in 2018, with an average personal loss of $2,600.
Nearly half of those who reported losing their cryptocurrency to scams since 2021 said they all started with some kind of information on a social media platform, mainly including Instagram (32%), Facebook (26%) ), WhatsApp (9%) and Telegram (7%).
In my country, this is also a big problem. According to Zhifan Technology, "2021 Blockchain and Virtual Currency Crime Trend Research Report", the number of virtual currency fraud and money laundering cases is the largest, and the average amount involved in virtual currency online gambling cases is the largest. High. In 2021, the number of fraud and money laundering cases will rank first, accounting for 38.8% of the total, and the average amount involved will be as low as 90 million yuan.
According to the "Report", in 2021, virtual currency MLM cases accounted for 29.2% of the total number, ranking second, and the cumulative amount involved ranked first, accounting for 67.82% of the total amount involved in all virtual currency crime cases. Whether in terms of quantity or amount, virtual currency pyramid schemes are the main type of virtual currency crimes.
If cybercrime is measured by the size of a country, according to CybersecurityVentures, the cost of global cybercrime will grow at an annual rate of 15% in the next five years, reaching 10.5 trillion U.S. dollars per year by 2025, second only to the United States and China. China's third largest economy in the world. In cybercrime, it is closely related to virtual currency, which brings great damage to the real economy.
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virtual currency fraud
⚑ Basic version
Scammers create a fake cryptocurrency exchange or a fork of an official crypto wallet to trick unsuspecting victims in a low-level approach that often catches sophisticated investors off guard.
☞Scam Routine
These fake websites often have very similar domain names to the website they are trying to imitate, making it difficult to tell the real from the fake at a glance. Virtual currency websites usually operate in two ways, one is as a phishing page: in the webpage, implant the relevant code, and once you enter all the details, such as your encrypted wallet password and seed phrase and Other financial information, all the money may eventually fall into the hands of scammers; second, to lure you to invest more. Similar to gambling, it may allow you to make a little money on the website at the beginning, and after you increase your investment, close the website or make other requests.
Citation: On June 25, Indian media reported that cybersecurity firm CloudSEK said it had uncovered an ongoing operation in which phishing domains and fake encryption apps were being used to defraud unsuspecting investors. The firm estimates that scammers have made as much as $128 million (roughly Rs. 1,000 crore) through such crypto scams.
Another common way scammers defraud cryptocurrency investors is through fake apps downloaded from official app stores or other third-party platforms. Although the possibility of being discovered is very high, and it will be removed from the shelves, it does not affect that someone has already been deceived.
☞Scam Routine
This kind of large-scale advertising from the beginning, through some small benefits, etc. to induce people to download the app, and then various routines will be used for victims to consume, until a large number of victims realize that the scammers just run away.
Citation: On June 29, BBC News reported that people aged 21-30 are the most likely to be victims of scams, as most of them happen on social media apps, shopping site apps and dating apps. Scammers are targeting people of all ages by exploiting "weaknesses outside the banking system" via online and social media platforms. App crime will cost the most in 2021 at £166.2 million.
Scammers promise that after you help them, they will send you some cryptocurrency in return.
☞Scam Routine
Scammers will generally send you private messages on major social media platforms, and will create a sense of legitimacy without any loss for you through speech techniques, and make you feel that this is a "once-in-a-lifetime" opportunity. If you don't do it, you will immediately Someone else does it, and it pays off right away.
Citation: Coinbase once refuted rumors on its official website. There was a Twitter account that pretended to be Coinbase, and used a picture to promote a 5,000 BTC scam. Just reply to a fake Coinbase tweet. The link in this image leads to a webpage that will ask you to verify your bitcoin address by sending 0.1 to 10 bitcoins to the scammer's giveaway address. According to the scammer's webpage, you will get x10 money back. While it sounds great, it is 100% a scam and you will receive 0 BTC back.
Crypto phishing scams often target information related to online wallets. Scammers target encrypted wallet private keys, which are necessary to access funds within the wallet.
☞Scam Routine
They generally also set up a similar website, and then use emails to lure recipients to visit the specially created website and ask them to enter their private key information. Once the victim has entered their information, the hackers steal the cryptocurrency from these wallets.
Example: According to reports, BoredApe Yacht Club (BAYC) was recently attacked by phishing scammers, resulting in a loss of 200 ETH, equivalent to $357,000.
This is also one of the commonly used methods of basic fraud. When you receive this information, just ignore it.
☞Scam Routine
Scammers will generally send you an email, claiming to have a record of your visit to an adult website, and at the same time record some videos of what you are doing on the website, and threaten to make these videos public, or some other means of life safety, Unless you send them the password seed phrase or send them the password.
Citation: Recently, the Haizhu Police in Guangzhou focused on the deployment of the "Tianlei No. 1" special operation, focusing on combating violations of the vital interests of the masses and frequent occurrence of new types of online crimes. The gang arrested three suspects and seized a batch of mobile phones and bank cards involved in the case. One of the victims, with all their savings and a loan of more than 200,000 yuan, lost a total of more than 430,000 yuan.
⚑ Advanced version
Strictly speaking, the phenomenon of pumping up shipments is not a kind of fraud. However, it did hurt many investors, so here it is classified as a fraud.
☞Scam Routine
In the early stage, specific tokens will be hyped through exchanges, communities, news media, etc. Create a situation for traders that if you miss this wave of market, you will lose money, prompting traders to scramble to buy tokens and push up prices. After successfully inflating the price, these scammers sell their assets, leading to a crash as the price of the currency drops sharply, which can happen in a matter of minutes, leaving you hard to guard against.
Example: In early January of this year, investors sued Kim Kardashian, boxing champion Floyd Mayweather and others, accusing them of falsely promoting a certain virtual currency, pumping up shipments, and causing losses to investors. The virtual currency EthereumMax invited a number of stars, and Internet celebrities promoted the currency, allowing the stars to use their fame to attract fans to buy the currency, which has since increased the value of the currency. Then, certain vested interests sold EthereumMax at a high price to obtain huge profits. Therefore, pumping is very common, and you will be fooled if you are not careful, especially in the case of celebrity endorsement.
Scammers sometimes pose as or claim to be endorsed by celebrities, businessmen, politicians, or influencers in order to attract the attention of potential targets.
☞Scam Routine
This kind of scam may be relatively complicated. If you pretend to be a celebrity, you may need to reproduce the celebrity's fans, content, etc., and use their influence to sell non-existent virtual cryptocurrencies to novice investors, or invite you to join various Virtual currency projects, defrauding a lot of money. There is also the same discussion, the endorsement is very good, all kinds of certificates are complete, if you study carefully, you will find that they are all fake.
Citation: On June 28, the British Santander Bank released a report showing that in the first quarter of 2022, fraud cases involving celebrity-related cryptocurrencies surged by 61%, resulting in a loss of 2 million pounds.
Cloud mining, which allows you to rent the mining hardware they operate in exchange for a flat fee, is not theoretically a scam, or part of it.
☞Scam Routine
This method of operation is entirely aimed at small leeks, allowing investors to mine remotely without purchasing expensive mining hardware. However, many cloud mining companies are scams, they are invalid mining, and even better, they make you lose money, but in the end you will lose nothing.
Example: The Shanghai Rule of Law Daily once reported that Wang, who just graduated from university, is an electronic "enthusiast". In April 2021, a public account called "Qiu Mingshan XX Group" sent him a tweet, claiming that he only needed to download an app called "Rui X Mining Storage" to rent a graphics card for "cloud mining". "Mine" means to make money, and the daily income is 5%. In the first month, every recharge can be withdrawn with interest. In June of the same year, it was found that the software could not be opened, and the deposit of more than 40,000 yuan in the account disappeared.
Many projects will airdrop tokens into the user's digital wallet, but there are also scams in it. After accidentally authorizing the user to log in to the wallet, the funds in it will be transferred away.
☞Fraud Routine
Fraudsters generally airdrop their tokens to a large number of wallet addresses, often tens of thousands or even millions, and the wallet will show a value of tens of thousands of dollars. When the victim sees such a large amount of money, he will definitely want to go to the exchange to trade. When the transaction is exchanged for USDT, when the user authorizes, the scammer will transfer all the assets in the wallet, so when the wallet is authorized, the project information must be confirmed repeatedly.
Citation: Solana has had this scam before, where the scammers used a fake Solana Twitter account and said they were airdropping tokens to their followers, and then said to you, if you want to participate in the giveaway, it’s easy. You just need to send any amount of Solana (between 5SOL – 10,000 SOL) to our official donation address, once we receive your transaction, we will immediately send back (2x) to your address to send SOL.
ICOs are a way for start-up crypto companies to raise funds from future users;
IDO: InitialDigital Assets Offering the first digital asset offering;
IEO: InitialExchange Offering Initial Exchange Offering;
IFO: InitialFork Offering The first fork currency issuance;
IGO: InitialGame Offering The first game release;
ILO: InitialLock-up Offering Initial lock-up offering.
☞Scam Routine
In most cases, scammers will promise investors discounts on new cryptocurrencies or other means in exchange for active cryptocurrencies such as mainstream coins or other popular virtual currencies. During this time, criminals will go to great lengths to deceive investors, such as renting fake offices and producing high-level marketing materials, various high-end activities, etc., to make them appear more real than the real ones.
Ci: In 2018, foreign media revealed that ModernTech, a Vietnamese cryptocurrency company leading the issuance of two ICO coins, ran away with money, involving an amount of US$660 million and 32,000 investors.
⚑ Premium version
Funding, generally speaking, is a Ponzi scheme. This kind of scam basically takes advantage of the greed or gambling of the victim, and attracts more and more people to invest in high profits, and uses the money of later users to pay the interest of previous users.
☞Scam Routine
Generally, this kind of scam starts with a completely worthless project or platform. By pulling people's heads, the victim is asked to invest in funds. The first person and project party to invest will earn money from subsequent investors. Once the flow of funds breaks, The funds will collapse immediately, and the victims will lose everything.
Example: In May last year, a criminal gang that used the Snailswap project as a bait to defraud virtual currency funds was destroyed in Hunan, involving a huge amount of money. The project claims to utilize the brand-new blockchain technology, and has issued an exchange announcement, which will be traded online in the near future. The victim, Wang, believed it was true. After clicking the link in the group to download the relevant APP, he transferred money to the wallet address in the APP in five times, worth more than RMB 300,000. When Wang wanted to withdraw cash, it showed a system error and found that he had been cheated.
Pixiu disk means that through the contract, you can only buy but not sell, some can only be sold with the address of the project party, and some can only be sold once or only for a small amount.
☞Scam Routine
Most scammers limit the selling authority by setting a whitelist in the smart contract, so that wallet addresses that are not in the whitelist cannot sell after purchasing currency. The whitelist is a normal function of the smart contract program, but it is used by people with ulterior motives Later, it became a tool for making money, causing many people to be deceived. Due to the hidden operation of Pixiu Pan and huge profits, it only needs a small cost to obtain dozens of times more income. Therefore, there is a growing trend at the moment, which makes investors hard to guard against.
Citation: In the first half of this year, ShibaTron Token (SHIBT) once attracted the attention of investors due to a rise of more than 1000% within 24 hours. But before he had time to be happy, PeckShield, the world's top blockchain security company, detected that the project SHIBT on BNBChain was fraudulent. sell. But according to the data on the chain, 4091 addresses have made about 6908 SHIBT transfers. This shows that the project party behind it is secretly reselling on a large scale, but restricting users from withdrawing money. This is a complete scam.
In a word, killing pigs is to use love scams and other methods to "raise pigs" for a long time. The longer you raise them, the harder you kill them.
☞Scam Routine
In the hog-killing scam, scammers show off their high income in various communities, financial management, and investment forums through routines such as making friends online or pretending to be investment mentors, and leave their contact information for others to add. friend. After the scammer becomes friends with the other party and establishes trust, the user is induced to transfer the mainstream currency or the currency circulating in the market to the fraudulent platform for trading. The user makes an initial profit, and after increasing the capital investment, it will continue to lose money until it returns to zero.
Citation: Recently, Nanjing police in Jiangsu uncovered a fraud case involving bitcoin recharge investment and account information maintenance, involving more than 420,000 yuan. According to the description of one of the victims, the general situation is as follows: she learned that speculating in "digital currency" can make a profit through a friend's circle of friends. Brainwashing is a lie. For the first time, Yang first invested 30,000 yuan and earned nearly 400,000 yuan within 24 hours. With more than 13 times the income, Yang tasted the "sweetness" at the beginning, and then he gradually fell into the game set by the other party.
Dogecoin is also the concept currency of Dogecoin, and later extended to various hot coins.
☞Scam Routine
The Dogecoin project, as long as it can catch hot spots, will not let it go. Issue a token to open a pool and start doing it, and there are still many victims who like to rush in. When the Lantern Festival comes, we will issue Yuanxiao coins; on Valentine’s Day, we will issue DogeLover coins. Of course, these coins will be all chicken feathers in the end. Scammers often use tricks to invest in a 10U or 20U top-up for a wave of dreams. At worst, they will lose a little money, and maybe they will catch up with hundreds of times and thousands of times? If you study carefully, you will find that the cost of one coin issued by these scammers is only about 20U. If they cheat one, they can get back their money, and if they cheat two, they can directly double it.
For example: CCTV once called names, and the scams of the Dogecoin project emerged one after another. After a few minutes of entering the group, a community of nearly 200 people rose up, and then a group of people promoted XX coins in the group, and sent various brainwashing words to let users follow the trend to buy. In the atmosphere of the community, 90% are liars who are active, and the remaining 10% are either plucked wool or leeks waiting to be cut. The liquidity of the project pool is basically increased by the project party, and XX currency directly encourages people in the community to recharge continuously to increase the liquidity of the pool. When the victim really invests in the money, the invested coins will return to zero at a speed.
Ukrainian government withdrawing donor funds, of course it takes the right time and place for a Rugpulls like this to happen, a rare "good" scam.
☞Scam Routine
In February 2022, shortly after Russia invaded Ukraine, the Ukrainian government quickly decided to accept donations in cryptocurrency to take advantage of the huge amount of money in the cryptocurrency field to help them do something.
While there were sizable donations at first, the influx of cryptocurrencies was exacerbated after Ukraine announced an airdrop for those who donated via the Ethereum network. As Ukrainians say, they are actually sending donors "rewards" for their donations. In just under 2 days, approximately 60,000 transactions were made to Ukraine on the Ethereum blockchain.
According to Ukrainian officials, individuals began donating very small amounts of money so that they could receive airdrops in time for quick profits. A few days later, Ukraine decided to cancel the airdrop. Donors who didn't make a profit started claiming it was a "Rugpull". In theory, this is Rugpull. A cryptocurrency developer promises to raise money, then abandons the project and runs away with all the money.
Ci: There is no precedent for this kind of Rugpull with a government background, but it has indeed taught us a lesson. No matter what the background of the project party, it is possible to Rugpull at any time.
The essence of a smart contract is a piece of code running in the blockchain network, which completes the business logic assigned by the user. But we know that as long as programs are written by humans, errors and bugs are bound to occur. Some errors or loopholes will have a devastating impact on investors
☞Scam Routine
Let’s talk about a well-known US chain BEC contract vulnerability. The principle of this vulnerability is that when the contract provides withdrawal or transfer functions, it will generally operate on the balance of the address. If the balance operation does not use SafeMath, the attacker can use the clever design to The deduction amount of the transfer is set to 0, while the transfer amount is set to a large value, resulting in the contract generating a lot of tokens out of thin air or the user withdrawing a lot of balance from the contract out of thin air.
For example: The DAO security breach in June 2016, resulting in a loss of 50 million US dollars. In July 2017, the Parity multi-signature wallet had two security breaches, resulting in a loss of 30 million US dollars and 152 million US dollars respectively. In April 2018, the BEC token was stolen, and its market value of 900 million US dollars was almost zeroed due to a security breach of a line of code.
This type of scammer collects a large amount of data through technological means to analyze the characteristics of different human beings from all walks of life to determine which type of people can be quickly deceived.
☞Scam Routine
Scammers do a lot of work researching and educating older and perhaps some younger scam victims. Research has identified common characteristics that make someone particularly vulnerable to scam solicitation, including differences in cognitive ability, education, affluence, risk-taking, self-control, and more.
After obtaining this information, these people will be brainwashed and educated, and finally, extended to their own issued currency, or other means.
Example: In May, a police station in Korla City received a call from Ms. Zhang, a member of the public, saying that she had a conflict with her mother over "investing" in virtual currency. Scammers take advantage of the victims' psychology of wanting to get rich overnight, fabricate a "rich dream" for them, let them fall into it, and defraud them of money unknowingly.
Scams are updated every day, and they suddenly appear in front of you in ways you didn't expect, and you don't know anything about it. Therefore, when we invest, we must be careful and careful, especially not to trust strangers.
Can stolen virtual currency be recovered?
First answer whether it can be retrieved, it is difficult, very difficult, very difficult, very few have been retrieved, and there is nowhere to appeal.
Recently, a virtual currency transaction case was heard in the People's Court of Sichuan Pilot Free Trade Zone.
As a result, the court held that the case did not conform to the logic and transaction habits of general private lending, so it was determined that the two parties did not have a loan agreement. Virtual currency is a virtual property and does not have currency attributes such as legal compensation and mandatory. Any organization or individual should be prohibited from engaging in token issuance and financing activities. Debts arising from virtual currency are illegal debts and cannot be protected by law. The losses and risks arising therefrom should be borne by investors themselves.
How to avoid being scammed?
1. With the help of security tools, review the invested projects.
GAS real-time monitoring: https://blog.mathwallet.org/?p=3467
Check wallet assets: https://zapper.fi/zh
Check NFT rating: https://checkmynft.com/
Giant whale analysis: https://whalehunters.xyz/
Open source token NFT and authorization website: https://revoke.cash/
Wallet approved project view: https://approved.zone/
Wallet authorization project view: https://moonbeam.moonscan.io/tokenapprovalchecker
Wallet high-risk behavior detection: www.metashield.cc
ETH Approval Checker: https://etherscan.io/tokenapprovalchecker
At least 29 cybersecurity companies around the world provide audit services for cryptocurrency projects and extend to DeFi projects. Calculated by the number of audited projects, the mainstream DeFi audit institutions are:
OpenZeppelin: https://www.openzeppelin.com/
TrailofBits: https://www.trailofbits.com/
ConsenSysDiligence: https://consensys.net/diligence/
Certik: https://www.certik.com/
Quantstamp: https://quantstamp.com/
These five contract auditors have audited more than 80% of the DeFi projects on the market.
Due to space limitations, there are more tools that will not be listed one by one.
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If you have useful tools, please recommend them.
2. DYOR (Do Your Own Research)
Past success does not guarantee future success, but past fraud is a good predictor of future project failure.
Therefore, before investing in any project, we should check who the project party is, the relationship network behind it, the management and background, etc. Tools such as smart contract audits and KYC verification are very useful for confirming the authenticity of projects.
A smart contract audit will check for potentially malicious bugs in the code in the project, which could allow someone to steal your funds. Industry sources said KYC verification verifies the identity and background of team members.
For a high-quality encryption project, they must know what pain points their products can solve and what value they can create, rather than some fake things.
If the project does not even introduce these, or there are no relevant cases, and the community is in a mess, then this is a big red flag.
Why is my luck so good? Think about this before you come across a project with a super high ROI.
Whether you’re investing in cryptocurrencies or anything else, beware of crypto projects that promise lucrative returns on your investment, this is the most common method used by scammers. They will say that they have a very high annual rate of return, and some even say that they can earn a return of 10 times or more than a hundred times in a short period of time.
So think about it at this time, why is your luck so good?
Visit the project's website. If there is no white paper detailing the project's purpose, risks, management resume, etc., then that's a problem. Likewise, investors need to understand the nature of the product or project they are investing in.
If the project does publish a white paper, check to see if the main points are clearly written.
Statements made on the website must be verified by third parties. Crypto project founders should provide this kind of verification: a person or company who can vouch for them. Potential investors should also check media coverage of such projects to see if questions are being raised.
Potential investors should take note if the project's goals and timelines are unclear, or if confusing language and technical talk obscure simple answers to obvious questions.
Investors should be very wary of unaudited projects. Audits can detect security issues, and formal projects generally regard their security as a warning line.
Because even some established companies have been hacked. For example, in January this year, the DeFi platform QubitFinance was hacked and 206,809 Binance coins worth $80 million were stolen. Earlier, Crypto.com, one of the largest trading platforms, had stolen more than $35 million worth of bitcoin and ethereum.
write at the end
In my country, virtual currency-related business activities, including exchange and transactions, are suspected of illegal financial activities and are strictly prohibited. It is also an illegal financial activity for foreign virtual currency exchanges to provide services to residents in my country through the Internet. Virtual currency has no real value support, and its price is extremely easy to be manipulated. There are risks of false assets, business failure risks, and investment speculation risks in related speculative trading activities. At present, according to the existing judicial practice in our country, virtual currency investment is not protected by law, and the corresponding risks and losses are borne by themselves. If there are still currency circles, investors should enhance risk awareness, sort out correct investment concepts, and avoid falling into virtual currency investment scams.
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