Overview
Hacks and scams are two major threats to users seeking to hop aboard the crypto bandwagon. Hacks are tech-enhanced attacks that take advantage of system defects, while scams entail tricking people by convincing them to hand over their money via fake projects or too-good-to-be-true offers.
The Top Scams and Hacks That Dominated the Crypto Space
Phishing Attacks
These fraudulent attempts steal sensitive data like passwords and private keys by pretending to be a trusted entity. Mostly, attackers impersonate official services or platforms, developing fake messages and websites meant to trick users into disclosing personal data.
Protection from phishing entails double-checking the sender’s URL and identity prior to signing anything or clicking links. Multifactor authentication (MFA) should be included as an additional security layer, and a person should only interact with official and substantiated communication channels.
Rug Pulls
They happen when a crypto project’s developers abruptly vanish with investors’ funds. The scams normally happen with new tokens, initial coin offerings (ICOs), and decentralized finance (DeFi) platforms.
A famous example from September of this year entailed BaseBros Fi, where developers disappeared after taking down their social media accounts and taking $130000 from user deposits. They utilized an unaudited smart contract to withdraw funds without raising suspicions.
One can avoid rug pulls by investing in projects with audited smart contracts and transparent, identifiable teams. Additionally, one should be wary of projects that promise high returns.
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Fake Airdrops
In these scams, offenders provide free tokens to trick users into disclosing their private keys or linking their wallets to malicious sites. People can protect themselves from fake airdrops by solely engaging with airdrops from authorized official sources and being skeptical of unsolicited messages concerning airdrops.
Crypto Ponzi Schemes
They entail promises of significant returns, where early investors are paid using funds from new investors instead of legitimate profits. The schemes plunge when the number of new participants to sustain payouts drops.
People must be cautious with investments that appear too good to be true. They must conduct thorough research about firms or projects prior to investing and check for transparency regarding how profits are generated.
Smart Contract Exploits
In these attacks, hackers drain or manipulate funds in a project’s code. People can protect themselves from these exploits by considering projects rigorously audited by trustworthy third-party companies.
People should also avoid inadequately tested decentralized apps and remain informed about susceptibilities in the DeFi space.
Crypto Exchange hacks
They occur when attackers leverage susceptibilities in the exchange’s security infrastructure. This facilitates the theft of funds from user accounts.
To avoid being a victim, one should not keep large sums of crypto on exchanges. Safe asset storage should entail the use of cold storage or hardware wallets.
People should enable two-factor authentication and monitor network activity regularly for suspicious behavior.
Money Mule Scams
The scams entail criminals recruiting people to move stolen or illegal funds via their accounts in exchange for a commission. People should safeguard themselves by not transferring funds from others without a comprehensive understanding of their legitimacy and source.
People must also be cautious of requests to utilize their accounts to move significant amounts of funds, particularly when huge commissions are guaranteed.
Celebrity Impersonation Scams
They utilize the identity of famous public figures to trick people into sending money, mainly via fake giveaways or promotions. The scams depend on deepfake technology or hacked social media accounts to develop convincing crypto schemes.
People can safeguard themselves by being cautious of promotions involving crypto giveaways. They must confirm the offers’ authenticity via the celebrities’ official channels and refrain from sending crypto to addresses that promise returns.
Steps to Take After Becoming a Crypto Scam Victim
The general steps include:
- Ceasing communication with the scammer
- Documenting everything
- Reporting the scam to the platform or exchange
- Contacting blockchain forensic firms
- Filing a complaint with law enforcement
- Alerting the payment provider or bank
- Educating oneself on crypto security
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