Hello everyone, here is our collection of all the interesting crypto articles about scams in the crypto space and deception. We hope you will read the stories and draw conclusions from them on how to protect your funds. As more and more new scam schemes emerge, it’s essential to stay informed and learn how to safeguard your assets.
2024 – crazy news!
Germany and Britain simultaneously seized cryptocurrencies worth approximately $4 billion on January 30, 2024. This marks one of the largest such operations in the history of the cryptocurrency market.
In Germany, law enforcement agencies confiscated 50,000 bitcoins worth approximately $2.17 billion (at the exchange rate on the specified date). The case is related to the operation of a pirated website that violated copyright law in 2013. The illegally obtained profits from this site were converted into bitcoins. One of the two suspects voluntarily handed over the cryptocurrency to the Federal Criminal Police Office (BKA). As of the end of January 2024, the money laundering investigation is ongoing, and no official charges have been filed against the men.
In Britain, police confiscated bitcoins worth over $1.77 billion, which were obtained through investment fraud perpetrated in China from 2014 to 2017. Jian Wen, a 42-year-old woman, is implicated in the case for aiding in money laundering for other individuals who organized the financial scheme. Law enforcement officials seized devices with digital wallets containing the cryptocurrency.
It is noted that Wen herself did not directly participate in the fraud and did not have access to all funds obtained unlawfully. However, Wen does not dispute the use of bitcoins. She is accused of converting bitcoins into cash, jewelry, and real estate. This includes a mansion with seven bedrooms and a pool, which was listed for sale for approximately $29.73 million, as well as a house worth $15.82 million with eight bedrooms, a cinema, and a gym.
Hacking Incidents:
Since the beginning of 2024, there has been a wave of hacks targeting various verified accounts on the X social network aimed at profiting from the cryptocurrency market. Notable among these hacks was the compromise of the United States Securities and Exchange Commission’s (SEC) account on January 9, where a message was posted allegedly approving spot Bitcoin exchange-traded funds (BTC-ETF) for trading on the exchange. This occurred at a time when rumors suggested that the SEC was poised to approve a list of such funds. The market reacted strongly to the fake announcement, initially causing a significant increase and then a subsequent decrease in the price of Bitcoin.
An express investigation revealed that the SEC account did not have two-factor authentication enabled, and someone had obtained the phone number to which it was linked. It turned out that Mandiant also temporarily disabled two-factor authentication due to “changes in X’s two-factor authentication policy.” It appears that changes in X’s two-factor authentication policy led to a rollback of its use and resulted in a wave of hacking incidents. Once enabled, users did not check whether two-factor authentication had been reset. Therefore, it is recommended to regularly check the operation of one-time passwords and two-factor authentication.
2023 – not bad too
In 2023, the cryptocurrency industry globally lost approximately $2.61 billion due to hacking attacks and various fraudulent schemes. However, only around $674.9 million, roughly a quarter of the stolen funds, were successfully recovered. These figures come from a study by PeckShield, whose results were published on January 29, 2024.
According to estimates, there were over 600 major breaches in the crypto space in 2023. Out of the $2.61 billion stolen from crypto platforms, approximately $1.5 billion was lost due to hacking attacks, while the remaining amount was attributed to incidents related to fraud. Overall losses were 27.78% lower compared to 2022 when approximately $3.6 billion worth of cryptocurrency was stolen. The largest losses in 2023 occurred in November ($364.4 million) and September ($339.2 million).
Criminals continued to focus on DeFi protocols, which accounted for approximately 67% of the total damage. Another 33% was stolen from centralized exchange platforms (CEX). The top five most damaging incidents included Mixin (losses of around $200 million), Euler Finance ($197 million), Poloniex ($125 million), HECO Bridge & HTX ($111 million), and Orbit Chain ($81.5 million). Approximately 40% of the attacks in 2023 were carried out using flash loans.
The PeckShield study also noted that in 2023, the volume of stolen and laundered cryptocurrency funds decreased by 25% compared to the previous year, totaling approximately $342 million, whereas in 2022, the figure was estimated at $460 million. This decline can be attributed to strengthened security measures in the cryptocurrency sector and the development of regulations in this area. Additionally, preventive protective measures are being taken.
Over 40% of cryptocurrency investment publications were fraudulent
Аccording to a report by Angara Security. Using OSINT tools, they analyzed posts in public Telegram channels related to cryptocurrencies, identifying approximately 22,000 materials, of which nearly 9,000 were flagged as suspicious and subsequently removed. The majority of deleted messages urged users to invest in the crypto market, promising returns such as turning 1000 rubles into 70,000 rubles, with transactions often requested to be made to a bank card. Angara Security disclosed this information on January 19, 2024.
To attract users, scammers employed aggressive names for their Telegram channels such as “earnings now,” “path to success,” “financial independence,” “smart investments,” “crypto farm,” “crypto cash,” and “official channel.” The main types of content on these channels included cryptocurrency earning courses, investment proposals, advertisements for investor groups and channels, covert promotions for various platforms, cryptocurrency wallet ads, and registration bonuses.
“Miscreants understand and track not only the issues of ordinary users but also of companies. They attract them with phrases like ‘your assets cannot be frozen…’ offering legal entities not only to register offshore companies but also to invest in cryptocurrency to avoid formalities when legalizing business in foreign jurisdictions,” said Victoria Varlamova, Senior Brand Protection Expert at Angara Security.
For some schemes, scammers developed mobile applications and websites used as platforms for phishing attacks and scam pages. For instance, in 2023, nearly 1500 domains related to investments were registered in the .ru segment, with 50% registered in the fourth quarter of 2023. Some registered domains made references to platforms like Binance and CommEX.
“The increase in the number of fraudulent platforms at the end of 2023 may be associated with the departure of the Binance cryptocurrency exchange from Russia and the sale of its business to a Russian company. Cybercriminals began to mimic the successor to Binance – the CommEX platform – and create similar projects to extort money,” continued Victoria Varlamova.
In addition to the risks of investment losses, users on such platforms face higher risks of theft of investors’ personal data and private keys to cryptocurrency wallets, which can be used for blackmail and other fraudulent activities by cybercriminals.
To avoid falling victim to criminals’ traps, Angara Security experts recommend choosing only well-known cryptocurrencies and checking potential partners against the Bank of Russia’s “blacklist,” which includes nearly 2,000 cryptocurrency companies with signs of illegal activity and financial pyramid schemes. It is advisable to use applications downloaded only from Google Play or the Apple Store for cryptocurrency transactions, and for websites, to verify the registration date and domain owner.
Cryptocurrency companies fined a record $5.8 billion in the past year.
In 2023, cryptocurrency and fintech companies were fined a total of approximately $5.8 billion, marking a record high. This information comes from a study whose results were published on January 9, 2024.
According to the Financial Times, the cumulative amount of fines imposed on crypto companies surpassed that of the entire traditional financial system for the first time, with traditional finance paying fines totaling approximately $835 million. The situation is primarily attributed to increased regulatory scrutiny over illegal financial flows and misconduct. The $5.8 billion collected from cryptocurrency companies includes a $4.3 billion fine for the cryptocurrency exchange Binance, which the US prosecutors described as a “shot across the bow.”
The number of fines against cryptocurrency companies significantly increased in 2023, with 11 penalties imposed, compared to an average of two fines per year over the previous five years. Experts believe that fines will continue to rise in the future.
“Dennis Kelleher, Executive Director of Better Markets, a Washington-based company advocating for stricter regulation in the crypto market, said, ‘Widespread fraud and crime in the high-profile cryptocurrency arena have forced regulators and prosecutors to allocate additional resources to monitor this sector.'”
The disclosed data indicates that in 2023, the total amount of fines for money laundering and other financial crimes (including fraud in the banking sector, payments, etc.) increased by over 30% compared to 2022, reaching $6.6 billion. However, this is significantly lower than the peak level of $11.3 billion recorded in 2015.
Cryptocurrency theft worldwide decreased by 50% in a year
In 2023, the damage from hacker attacks on various cryptocurrency platforms is estimated at approximately $1.7 billion. This is a decrease of over 50% compared to 2022 when losses amounted to nearly $4 billion. These findings are reported in a study by TRM Labs, the results of which were published on December 7, 2023.
Analysts identified about 160 cyberattacks on various cryptocurrency resources in 2023, which is roughly consistent with the level of the previous year. The largest portion of funds, 57.6%, was stolen during infrastructure attacks, which involve, among other things, stealing private keys. Another 10.8% of the hacks in 2023 were related to protocols, while 10.5% were due to exploits. Combined methods were used in 17.6% of all incidents. In 3.5% of cases, specialists were unable to reliably identify the attack vector.
The top ten hacks in 2023 accounted for almost 70% of all stolen funds. The damage from some of them exceeded $100 million, including attacks on Euler Finance (March), Multichain (July), Mixin Network (September), and Poloniex (November).
Experts at TRM Labs attribute the significant reduction in overall damage from attacks on cryptocurrency platforms to several factors. Throughout 2023, the cryptocurrency industry significantly strengthened its security protocols. Real-time transaction monitoring tools and anomaly detection systems have been implemented. These tools protect digital wallets and cryptocurrency platforms from intrusions and allow for the detection and repulsion of potential attacks at an early stage. Additionally, law enforcement agencies worldwide have increased their focus on cybercrimes related to digital currencies. Furthermore, participants in the cryptocurrency industry have established more efficient information exchange about vulnerabilities and threats.
Fraudster Returns $7.8 Million to Cryptocurrency Exchange and Lands Job
On October 7, 2023, a fraudster returned $7.8 million to the cryptocurrency exchange HTX (formerly Huobi) after stealing 5000 ETH, approximately valued at $7.8 million. In return for the restitution, HTX provided the hacker with a monetary reward and even offered them a job.
Hong Kong-Based Mixin Network Halts Operations After $200 Million Hack
On September 25, 2023, the Hong Kong-based cryptocurrency company Mixin Network disclosed a cyberattack resulting in the theft of approximately $200 million from its clients. Following the incident, the platform ceased all operations, indicating that it was taking steps to address the security breach.
CoinEx Confirms $31 Million Theft in Cyberattack
CoinEx, an international cryptocurrency exchange, confirmed a theft of $31 million as a result of a cyberattack on September 12, 2023.
Hacker Siphons Off $40 Million from Cryptocurrency Platform Stake
In early September 2023, it came to light that Stake, a major cryptocurrency platform for casinos and sports betting, had fallen victim to a cyberattack, resulting in the theft of over $40 million.
Former Head of Thodex Sentenced to 11,196 Years in Prison
On September 7, 2023, a Turkish court in Istanbul sentenced Faruk Fatih Ozer, the former head of the cryptocurrency exchange Thodex, to 11,196 years in prison for fraud and other crimes.
Co-Founder of Tornado Cash Arrested in Alleged $1 Billion Laundering Case
Roman Storm, co-founder of Tornado Cash, a fully decentralized cryptocurrency mixer with open-source code, was arrested on September 6, 2023, in connection with allegations of laundering approximately $1 billion in hacked funds.
Conclusion:
Cryptocurrency is not only an exciting and attractive world of financial opportunities, but also a sphere where dangers lurk. Recent events have shown that fraud and cyberattacks thrive in this space. Theft of millions of dollars, hacker attacks on cryptocurrency exchanges, and arrests of cryptocurrency service founders all serve as reminders that in the world of cryptocurrency, one must be cautious and vigilant. While cryptocurrency offers new possibilities for investment and financial transactions, it also brings risks that should not be underestimated. To protect one’s assets and personal security, it is important to be informed and take cautious measures when dealing with cryptocurrency.
Frequently Asked Questions (FAQ)
1. How can I protect my cryptocurrency investments from scams and fraud?
To safeguard your cryptocurrency investments, it’s crucial to stay informed about the latest scams and fraud schemes prevalent in the crypto space. Be cautious when dealing with unknown or suspicious platforms, and always conduct thorough research before investing. Additionally, utilize security measures such as two-factor authentication and ensure that you’re using reputable wallets and exchanges.
2. What are some common types of cryptocurrency scams?
Common cryptocurrency scams include Ponzi schemes, fake ICOs (Initial Coin Offerings), phishing attacks, and pump and dump schemes. Scammers may also impersonate legitimate companies or individuals to deceive investors into sending them funds.
3. How can I identify potential cryptocurrency scams?
Be wary of promises of high returns with little to no risk, as these are often red flags for scams. Additionally, watch out for unsolicited investment opportunities and be cautious when sharing personal information or sending funds to unfamiliar addresses. Always verify the legitimacy of projects and platforms before investing.
4. What should I do if I suspect I’ve fallen victim to a cryptocurrency scam?
If you believe you’ve been scammed, act quickly to minimize further losses. Report the incident to relevant authorities and platforms, such as your local law enforcement agency and the cryptocurrency exchange or wallet provider involved. Additionally, consider seeking legal advice to explore options for recovering your funds.
5. How can I stay updated on the latest developments in the cryptocurrency industry?
Stay informed by following reputable news sources, forums, and social media channels dedicated to cryptocurrency and blockchain technology. Additionally, consider joining online communities and discussion groups where you can engage with other enthusiasts and stay abreast of industry trends and developments.
6. Are there any regulatory measures in place to protect investors from cryptocurrency scams?
Regulatory bodies in various countries are increasingly implementing measures to regulate the cryptocurrency industry and protect investors. These measures may include licensing requirements for exchanges and stricter compliance standards for cryptocurrency projects. Stay informed about regulatory developments in your jurisdiction to ensure compliance and protect your investments.
7. What steps can I take to secure my cryptocurrency holdings from potential cyberattacks?
To enhance the security of your cryptocurrency holdings, consider using hardware wallets or cold storage solutions to store your funds offline. Implement strong passwords and encryption for your wallets and accounts, and regularly update your software to patch known vulnerabilities. Additionally, be cautious when clicking on links or downloading files related to cryptocurrency transactions, as these could be vectors for malware or phishing attacks.
8. How can I verify the legitimacy of a cryptocurrency project or platform?
Before investing in a cryptocurrency project or platform, conduct thorough due diligence to assess its legitimacy. Research the team behind the project, review its whitepaper and technical documentation, and check for partnerships or endorsements from reputable organizations. Look for transparency and clear communication from the project’s developers, and be wary of projects that promise guaranteed returns or seem too good to be true.
9. What are some warning signs of a potential cryptocurrency scam?
Some warning signs of cryptocurrency scams include promises of guaranteed returns, high-pressure sales tactics, and claims of insider information or exclusive opportunities. Be skeptical of projects or platforms that lack transparency or refuse to provide detailed information about their operations. Additionally, watch out for red flags such as poorly designed websites, grammatical errors in communications, and unverified claims of partnerships or endorsements.
10. What resources are available to help me report cryptocurrency scams or fraudulent activities?
If you encounter a cryptocurrency scam or fraudulent activity, report it to relevant authorities and regulatory bodies, such as the Securities and Exchange Commission (SEC) or Financial Conduct Authority (FCA) in your country. Additionally, many cryptocurrency exchanges and platforms have procedures in place for reporting suspicious activity or fraudulent behavior. By reporting scams and fraudulent activities, you can help protect yourself and other investors from falling victim to similar schemes in the future.
