From 99% purchase fees to capitalizing on FOMO: crypto scammers use fake tokens to steal our money
While the appeal of crypto is hard to ignore, its opportunities are tarnished by the threat of losing everything
The cryptocurrency market’s unfathomable growth this past year has been closely accompanied by an equally unfathomable growth in crypto-related crime. A new report by cybersecurity giant Check Point notes several scamming methods, which have become more and more prevalent – which are all centered around fraudulent tokens.
Some of the fake tokens “contain a 99% buy fee which will steal all your money at the buying phase,” while others will contain a “99% sell feel, which will steal all your money at the selling phase,” explain researchers Dikla Barda Roman Zikin and Oded Vanunu.
Additional scamming methods include hidden mint capabilities, that allow developers to create more coins and then sell them, or control who is allowed to sell. Hackers use this function to steal funds from the contact, sometimes exploiting built-in security vulnerabilities.
Scammers can also use the burn function – designed to permanently remove a coin from circulation – to destroy the tokens in the pool, which can cause their value to increase.
And then there’s the already classic “rug pull”: creating new fake tokens, luring victims into buying them, and then disappearing with all the money.
This type of scam was brough to public attention in late 2021, following the fraudulent Squid token inspired by the dystopian South Korean Netflix drama Squid Game. Launched in October, a single token exceeded $2,800 in value before the project’s unknown creator cashed out, cashing over $3 million.
Cashing in on FOMO
But one doesn’t always even need to mint fake coins to steal real ones. Sometimes, just announcing their coming is enough.
A new report by Akamai Technologies discusses a new phishing attempt built on fake rumors that exploit social engineering and FOMO. The ‘Amazon Token’ presale is coming, notes one headline. “Welcome to the Amazon Token project”, announces another.
Only problem? It’s not real.
Yes, there have been various reports that Amazon might launch its own digital currency in 2022, nothing official has been announced as of yet. The scammers created various fake news website announcing the pre-sale, as well as fake business sites (see below), where the victims had to pay for the supposed new token with existing cryptocurrency.
“The scam played upon the latest sentiments and increasing risk tolerance for crypto investing, leading victims to give away their credentials in the first phase of the fraud campaign,” explains the report’s author, lead security researcher Or Katz.
“Within the past few years, cryptocurrency and blockchain-related technologies have stormed into the public eye, garnering mainstream attention. It was only a matter of time until cybercriminals capitalized on this increased awareness to get in on the action,” Katz notes.
Crypto crime hits record $14 billion in 2021
Cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020. These staggering numbers were provided in early January 2022 by blockchain analysis firm Chainanalysis.
This analysis does come with a surprise, though. The report mentions that while the total cryptocurrency volume grew to $15.8 trillion in 2021, up 567% from 2020’s totals, illegal crypto transaction increased by just 79%, representing just 0.15% of all transaction volume in 2021.
The research team partially credits law enforcement’s evolving capabilities in this sphere with the relatively low increase in malicious activity. “However, we also have to balance the positives of the growth of legal cryptocurrency usage with the understanding that $14 billion worth of illicit activity represents a significant problem,” says the report.
So what can be done?
Let’s circle back to the Check Point report for that.
“It’s hard to ignore the appeal of crypto. It’s a shiny new thing that promises to change the world, and if prices continue on their upward trajectory, people have an opportunity to win a significant amount of money,” conclude the report’s authors, adding a warning that in this volatile market, scammers “will always find new ways to steal your money.”
The report does provide a few recommendations, such as making sure to use only known exchanges in cryptocurrency transactions, and buy from a known token.
Another recommendation is to be cautious of malicious marketplaces, especially of the ubiquitous phishing attempts that use fake websites that attempt to get the users to enter their login detail. Simply paying attention to the marketplace URL might prove very valuable in avoiding being manipulated by cybercriminals.