How to Stay Safe from Crypto Hacks and Phishing Scams

The rapidly changing state of the cryptocurrency market today, as well as the type of impact it will have on the future of commerce, elicit a variety of similar reactions from people. In as much as the attention of retail investors, speculators, and various types of institutional investors is turning toward the lucrative cryptocurrency markets, scammers and cheats are turning their attention in the same direction as well. According to the Federal Trade Commission (FTC) Consumer Sentinel, reports of crypto-related scams increased dramatically from October 2020 to March 31, 2021, with nearly 7,000 people reporting losses totaling more than $80 million during this period. These figures reflect a 12-fold increase in the number of reports when compared to the same period the previous year, as well as a nearly 1,000 percent increase in the amount of money reported as a result of the scam.

All types of investors have been attracted to cryptocurrency as a result of the frenzied buying and selling that has taken place over the past several years. Still, scammers have also been attracted to it. Crypto scams are most commonly used to obtain private information such as security codes or to trick an unsuspecting person into sending cryptocurrency to a hacked digital wallet, according to the FBI. The use of social engineering scams such as giveaways, romance scams, phishing, and extortion emails, are a problem in general society, but they are particularly prevalent when it comes to cryptocurrency trading.

Some of the Biggest Crypto Hacks of All Time

The Ronin Hack

Ronin Network, a cryptocurrency exchange that allows players of the Axie Infinity videogame to exchange their in-game tokens for other cryptocurrency, was the target of one of the largest cryptocurrency thefts in history, according to a calculation based on the value of the crypto assets at the time they were stolen in March 2022. Attackers stole private keys required for transaction authentication and used them to transfer 173,600 Ethereum and 25.5 million USDC (a stablecoin pegged to the US dollar) to their own wallets, the network announced on March 30. The heist is worth $614 million at the time of the heist, according to the current exchange rate.

It was discovered that the theft had taken place when a customer attempted to make a legitimate withdrawal. It was announced by Sky Mavis, the company behind Axie Infinity, that it is collaborating with “law enforcement officials, forensic cryptologists, and our investors to ensure that no user funds are lost.” “We understand that trust must be earned, and we are putting every resource at our disposal to put in place the most sophisticated security measures and processes in order to prevent future attacks,” the company stated.

Poly Network

The theft of $611 million from Poly Network, a smart contract platform that allows users to exchange tokens between disparate blockchains such as Bitcoin and Ethereum, is the largest crypto theft in history, according to a calculation based on the value of the crypto assets at the time they were stolen. An anonymous hacker transferred $611 million worth of Poly Network tokens to three wallets under their control on August 10, 2021. An investigation by security researcher Mudit Gupta revealed that the attacker had discovered a way to ‘unlock’ (i.e., buy) tokens on the Poly Network protocol without causing the tokens on other blockchains to be ‘locked’ (i.e., sold) as a result of the attack. 

Because of this, the attacker began returning the tokens the following day, which was fortunate for Poly Network. However, a person claiming to be the attacker stated that they had only stolen the tokens “for fun,” contrary to speculation that they were having difficulty selling them. Poly Network reported that all assets had been returned by the end of the week, with the exception of $33 million worth of ‘stable coin’ Tether, which had been frozen immediately following the attack.

Steven Dickens, a senior analyst at technology research company Futurum, wrote shortly after the theft that it was likely to strengthen the security of decentralized finance (DeFi) systems in the long run but that it would discredit them in the short run. “While there are certainly lessons to be learned,” he wrote, “we must also be mindful of the progress that has been made so far by the Defi community, which is, for all intents and purposes, less than a decade old.

What Are Phishing Scams?

In order to commit identity theft, individuals must unwittingly provide personal information or details that can be used for nefarious purposes. Phishing is a method of obtaining personal information that is then used for nefarious purposes. It is frequently accomplished through the creation of a fictitious website, email, or text message that appears to represent a legitimate company.

A scammer may use a fraudulent website that, on the surface, appears to be the same as the legitimate website to defraud the victim. Visitors to the site who believe they are interacting with a legitimate business may provide personal information to this site, such as social security numbers, account numbers, login IDs, and passwords, under the impression that they are doing so.

The information submitted is then used by the scammers to steal money, identities, or both from visitors, or it is sold to other criminal organizations for use in future scams. Fraudulent emails or text messages sent by scammers that are designed to appear as if they were sent by a legitimate company also fall under the umbrella term of phishing. These bogus emails or texts may contain malicious software, such as ransomware, that allows scammers to gain access to a victim’s computer or network.

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What Steps Can You Take to Protect Yourself from Crypto Hacks and Phishing Scams?

If an email touts offers that appear to be too good to be true, it is most likely that they are. It’s possible that you received an email claiming you’d won the lottery or some other lavish prize in exchange for clicking a link or providing sensitive personal information. Despite the fact that phishing emails may appear to originate from someone you know, if anything seems out of the ordinary, proceed with caution.

When in doubt, hover your mouse cursor over the email address of the sender to make sure it matches the email address you expect it to be from. If you are unsure of the company’s email address or website, give them a call to find out. Responding to emails with personal information is not recommended.

When it comes to virtual currencies and cryptocurrencies, don’t put money into them unless you fully understand how they work. Also, don’t invest in cryptocurrency with money you can’t afford to lose. Don’t make cryptocurrency investments or trades based on advice from someone you’ve only communicated with through the internet.

Social media posts promoting cryptocurrency giveaways should not be taken seriously. Keep your “private keys,” which allow you to access your virtual currency, out of the reach of others and in a safe location (preferably offline, where they cannot be hacked).

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Sources

• https://techmonitor.ai/technology/cybersecurity/biggest-cryptocurrency-hacks-of-all-time
• Author: Casey Murphy – https://www.investopedia.com/articles/forex/042315/beware-these-five-bitcoin-scams.asp
• Author: Adam Hayes – https://www.investopedia.com/terms/p/phishing.asp