Congress Questions Coinbase, FTX, Binance, Kraken in Crypto Fraud Crackdown

September 2, 2022 Bitcoin.com

US Authorities Warn of ‘Pig Butchering’ Crypto Scam Becoming Alarmingly Popular

August 21, 2022 Bitcoin.com

Aurora Labs exec details ‘fascinating and devious’ crypto scam he almost fell for

August 8, 2022 Coin Telegraph

Aurora Labs

A sharp-eyed escrow agent and a screenshot saved Aurora Labs' head of product Matt Henderson from losing his tokens to scammers.

Aurora Labs' head of product, Matt Henderson says there is a sophisticated over-the-counter (OTC) transaction scam running about that almost duped him into losing a stash of his hard-earned cryptocurrency.

Henderson detailed his personal run-in with a scam artist known as ‘Olai’ to his Twitter followers on Aug. 5.

Olai's scam essentially involves tricking a victim into believing payment had been received for an OTC crypto transaction, when in fact it wasn’t.

Today I nearly got caught by a fascinating and devious crypto scam during an OTC transaction. Read on to learn what happened, so you can avoid it happening to you.

— Matt Henderson (@dafacto) August 5, 2022

How it worked

Henderson explained the crypto scam began when Olai contacted him on the Telegram messaging app, inquiring about purchasing AURORA tokens with USC Coin (USDC).

The pair agreed to conduct the transaction via escrow, a common strategy by which a trusted, neutral third party holds assets on both sides of the transaction and releases them to the counterparty when payment conditions are met.

In this case, Henderson selected Aurora Labs’ head of security Frank Braun to act as the escrow agent, who he initially referred to as "Steve" in the Twitter thread.

Olai suggested:
1. I send the AURORA to Steve
2. Olai sends me a small USDC test transaction
3. Steve send Olai an small AURORA test transaction
4. Olai send me the USDC balance
5. Steve then sends them the AURORA balance
— Matt Henderson (@dafacto) August 5, 2022

However, Henderson caught wind of something suspicious when his escrow partner shared a screenshot of him supposedly giving the go-ahead to release the full amount of AURORA tokens to the buyer.

According to Henderson, the scammers replicated his Discord profile and directed Braun to release the AURORA token balance to the scammers.

Discord's blocking function made sure Henderson was unaware his profile had been cloned and scammers were impersonating him.

Based on this, some security steps I'll take in the future:

1. All funds sent to the escrow. No exceptions.

2. Inspect transactions in block explorers. Don't accept verbal confirmations.

3. Always create group chats yourself.

4. Verify IDs and confirmations out of band.
— Matt Henderson (@dafacto) August 6, 2022

After successfully evading the con, Henderson later unpacked the intricacies of the scheme, warning anyone trading crypto through OTC means to take extreme caution and avoid falling victim to the sophisticated scheme.

He also shared that the scammer named ‘Olai’ may still be active in the community, as a person using a similar name and tactic has been spotted on Telegram, according to Twitter user Scott Yeager.

"How curious... I was recently approached by an Olai Olsen on Telegram attempting to initiate an OTC deal and offering USDC. Same character?"

Earlier this year, the United States Federal Trade Commission found that nearly half of all crypto-related scams originated from social media platforms in 2021.

In a report in June, the FTC reported that as much as $1 billion in crypto has been lost to scammers throughout the year, more than a five-fold increase from 2020.

British Army’s social media accounts hacked by crypto scammers

July 4, 2022 Coin Telegraph

account compromise

Hackers had access to multiple official social media accounts of the British Army for nearly four hours, when they posted crypto phishing links and scams.

The British Army’s official Twitter, Facebook, and YouTube accounts were breached on July 3 for almost four hours, with scammers promoting rip-off non-fungible token (NFT) collections and cryptocurrency scams.

Just after 2PM ET on July 3, the United Kingdom Ministry of Defence (MOD) Press Office tweeted it was aware the Army’s social media accounts were compromised and had begun an investigation.

Nearly four hours later, close to 5:45PM ET, the Office provided an update that the account breaches were resolved. The British Army's official Twitter account also apologized for the posts, saying it would conduct an investigation and “learn from this incident.”

The breach of the Army’s Twitter and YouTube accounts that occurred earlier today has been resolved and an investigation is underway.

The Army takes information security extremely seriously and until their investigation is complete it would be inappropriate to comment further.
— Ministry of Defence Press Office (@DefenceHQPress) July 3, 2022

Screenshots of the British Army’s official Twitter account posted by users show the hackers promoting at least two fraudulent derivatives of “The Possessed” and “BAPESCLAN” NFT collections.

British Army Twitter account @BritishArmy appears to have been hacked pic.twitter.com/41HPtSeln1
— OSINTtechnical (@Osinttechnical) July 3, 2022

One screenshot shows the hackers pinning a tweet to a fake mint of The Possessed NFT collection, likely a phishing link that would drain user funds if their crypto wallet was connected. Tom Watson, one of the collection's creators, warned that the information was fake and asked his followers to report the account.

The @BritishArmy has been compromised and is currently being used to shill NFTs.

Previous archive of the Twitter profile: https://t.co/dQmlxlY5l8 pic.twitter.com/gifpsOy000
— vx-underground (@vxunderground) July 3, 2022

Over on YouTube, the hackers rebranded the account to resemble the Cathie Wood-founded investment firm Ark Invest, posting live stream videos of supposed interviews with Elon Musk and Twitter founder Jack Dorsey which were being watched by thousands of people.

the British Army's YouTube page, still under the control of some crypto scammers, is running 4 consecutive livestreams with approx 19,000 people watching as we speak. would be interesting if any of them who fall for the scam could have grounds to sue the Army pic.twitter.com/oVWrDsXKZ1
— Señor Rules (@wariotifo) July 3, 2022

On the commandeered YouTube channel, the posted videos presented QR codes for viewers to send crypto to, claiming they would receive double back, and promoted other cryptocurrency giveaway scams through QR codes.

It’s unknown at this time who was behind the attack, how they achieved it, and how many people may have fallen victim to the phishing and scam links. All of the links, tweets, and related material from the account breaches have since been deleted by the British Army.

As reported by Cointelegraph, as much as $1 billion has been lost to crypto scammers in 2021, with nearly 50% of all crypto-related scams coming from social media platforms. The United States Federal Trade Commission even labeled social media and crypto a “combustible combination for fraud.”

In late May, the Twitter account of NFT artist Beeple was compromised and posted links to a phishing website which netted the attacker over $438,000 in crypto and various NFTs. The links were made to look like a “surprise mint” of a new Beeple NFT collection.

Later in June, a similar “stealth mint” phishing link was posted on the compromised Twitter account of the upcoming Duppies NFT collection, with at least one victim losing 650 Solana (SOL), worth around $18,850 at the time.

Crypto influencers allegedly weaponize conspiracies to fleece QAnon followers

June 22, 2022 Coin Telegraph

altcoin scams

Mixing conspiracy theories, a distrust for traditional institutions and hopium in crypto, two influencers are alleged to have made millions using pump-and-dump schemes.

Two QAnon-affiliated conspiracy theorist influencers allegedly caused their followers millions of dollars in losses by running a cryptocurrency pump-and-dump scheme.

The pair reportedly persuaded their thousands of followers to invest in a portfolio of cryptos, presenting a misleading mix of conspiratorial and genuine content along with claims about institutions backing the tokens to generate hype and raise the price of the portfolio.

The allegations are included in an investigation by Logically, a group of data scientists and developers. It reported the two influencers running the Telegram channels “WhipLash347” and the “Quantum Stellar Initiative” (QSI) coordinated to promote lists of Stellar (XLM) altcoins which have been marked as fraudulent by the Stellar network.

WhipLash347 is a Telegram group with 277,000 followers and QSI has 35,000. They reportedly told their followers the cryptocurrencies would succeed based on their insider knowledge, claiming they had access to secret military intelligence.

The publication said the two mixed conspiratorial content and misinformation to target those distrusting of mainstream financial and media institutions to give authenticity to the cryptocurrencies they promoted. The losses are believed to be in the millions, and Logically claimed one man committed suicide after losing $100,000 in the scheme.

A user known as PatriotQakes, leads the QSI main channel, which has multiple regional affiliates. The ownership of the WhipLash347 account is believed to have changed hands more recently due to changed behavior.

Rocky Morningside, a former admin of the QSI group told Logically he believes that “without doubt that WhipLash347, PatriotQakes, and QSI are scam artists,” who were promoting “pump and dumps.”

Cointelegraph requested a response to the allegations from PatriotQakes, an account seemingly belonging to the person behind Whiplash347 and an admin of a regional QSI group regarding the allegations but did not receive a reply by the time of publication.

Neither of the groups have publicly acknowledged or responded to the allegations.

A former investor in one of the schemes using the name “Cutter” now runs a Twitter account aimed at exposing WhipLash347. He told Cointelegraph that he is a member of a Telegram group with 3000 other disgruntled investors and said of the person behind WhipLash347:

“He’s created a huge list of crypto’s with now dead domains, as well as bogus white papers claiming to be affiliated with real companies. We’ve talked to so many of the coins’ real creators that he mimics through copycat assets who have to continually tell people WhipLash is full of shit.”

Cutter says WhipLash creates trust with his followers through sharing similar political views, perpetuating the scheme by claiming “upcoming events” will cause the value of the assets to skyrocket.

According to Cutter, WhipLash responded to the claims by saying all information is under non-disclosure agreements and anybody affiliated with the assets isn’t allowed to talk until the “event”.

“There’s always a timeline, but when the dates pass and nothing happens, he creates new timelines. It’s never ending.”

He also apparently claimed to be in communication with figures like Elon Musk, and said the crypto-friendly billionaire backs the cryptocurrencies WhipLash is promoting.

Cutter said that anyone raising questions is kicked out of the group.

“Anyone who questions his narrative is removed from his Telegram group, and he continues to rinse and repeat among his followers. As people exit, new people join. It needs to stop.”

Social media blamed for $1B in crypto scam losses in 2021

June 6, 2022 Coin Telegraph

Social media blamed for B in crypto scam losses in 2021

Coin Telegraph

Nearly half of the consumers who reported a cryptocurrency-related scam in 2021 said it started with an ad, post or message on social media.

The United States Federal Trade Commission has labeled social media and crypto a “combustible combination for fraud,” with nearly half of all crypto-related scams originating from social media platforms in 2021.

Published on Friday, the report found that as much as $1 billion in crypto has been lost to scammers throughout the year, which was more than a five-fold increase from 2020, and nearly sixty times up from 2018.

New analysis finds consumers reported losing more than $1 billion in #cryptocurrency to scams since 2021. Most of the losses consumers reported were to bogus cryptocurrency investment scams: https://t.co/MYGTcaw1aS #DataSpotlight /1
— FTC (@FTC) June 3, 2022

As of March 31, the amount of crypto lost was already approaching half of the 2021 figure, showing that momentum doesn’t appear to be slowing.

The FTC found that Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%) were the top platforms used for crypto scams.

Interestingly, Twitter, the social media platform widely adopted by the crypto-community, was not mentioned despite being littered with spam and scam bots touting fake crypto giveaways.

Based on fraud reports to FTC’s Consumer Sentinel Network, the most common type of crypto scam was Investment Related Fraud, making up $575 million of the total $1-billion figure.

“These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they ‘invest.’”

According to the FTC, common investment scams include cases in which a so-called “investment manager” contacts a consumer, promising to grow their money — but only if the consumer buys cryptocurrency and transfers it into their online account.

Other methods include impersonating a celebrity who can multiply any cryptocurrency that a consumer sends them or promises free cash or cryptocurrency.

The FTC also lists scams that involve investment in fake art, gems and rare coins, bogus investment seminars and advice, and other miscellaneous investment scams as part of this group.

The next largest crypto-scam-related losses came from Romance Scams at $185 million, in which a love interest tries to entice someone into investing in a crypto scam.

Business and Government Impersonation Scams came in third at a total of $133 million, in which scammers target consumers, claiming that their money is at risk due to fraud or a government investigation.

“These scams can start with a text about a supposedly unauthorized Amazon purchase, or an alarming online pop-up made to look like a security alert from Microsoft. From there, people are reportedly told the fraud is extensive and their money is at risk.”

The scammers will then pretend to be a representative of the bank to secure the person’s crypto.

In other cases, scammers have impersonated border patrol agents reportedly telling people their fiat accounts are frozen as part of a drug trafficking investigation. These scammers tell people the only way to protect their money is to put it in crypto. They’re directed to take out cash and feed it into a crypto ATM and are tricked into sending it to the scammers’ wallet address instead.

The report found that people aged 20–49 were most likely to lose crypto to a scammer, with those in their 30s the hardest hit, making up 35% of total reported fraud losses.

The amount of crypto lost rises up according to age group, with the median individual reported cryptocurrency losses for those in their 70s reaching up to $11,708, compared to just $1,000 for 18- and 19-year-olds.

An article on the FTC’s Consumer Advice website details a number of ways to avoid cryptocurrency scams:

Only scammers demand payment in cryptocurrency. No legitimate business is going to demand you send cryptocurrency in advance — not to buy something and not to protect your money. That’s always a scam.
Only scammers will guarantee profits or big returns. Don’t trust people who promise you can quickly and easily make money in the crypto markets.
Never mix online dating and investment advice. If you meet someone on a dating site or app, and they want to show you how to invest in crypto or ask you to send them crypto, that’s a scam.

CFTC Charges Illinois and Oregon Residents in Alleged $44,000,000 Crypto Ponzi Scheme

May 23, 2022 The Daily Hodl

Targeted phishing scam nets $438K in crypto and NFTs from hacked Beeple account

May 23, 2022 Coin Telegraph

beeple

Links posted to a fake Louis Vuitton non-fungible token (NFT) raffle were made to capitalize on a recent real collaboration between Beeple and the luxury fashion brand.

Digital artist and popular non-fungible token (NFT) creator Mike Winkelmann, more commonly known as Beeple, had his Twitter account hacked on Sunday, May 22 as part of a phishing scam.

Harry Denley, a Security Analyst at MetaMask, alerted users that Beeple’s tweets at the time containing a link to a raffle of a Louis Vuitton NFT collaboration were in fact a phishing scam that would drain the crypto out of users' wallets if clicked.

⚠️ Beeple's Twitter account has been compromised (ATO) to post a phishing website to steal funds.

0x7b69c4f2ACF77300025E49DbDbB65B068b2Fda7D
0xF305F6073CFa24f05FF15CA5b387DD91f871b983 pic.twitter.com/0MPNwOPlEu
— harry.eth (whg.eth) (@sniko_) May 22, 2022

The scammers were likely looking to capitalize on a real recent collaboration between Beeple and Louis Vuitton. Earlier in May, Beeple designed 30 NFTs for the luxury fashion brand’s “Louis The Game” mobile game which were embedded as rewards to players.

The scammer continued to post phishing links from Beeple’s Twitter account leading to fake Beeple collections, luring in unsuspecting users with the promise of a free mint for unique NFTs.

Bad actors continue have access to Beeples Twitter account and they have now tweeted another phishing domain.

This one just prompts the user to send ETH to an EOA (0xcad7fc974F61A08ADEF110D1BA446fa5b5B5Bb27).

Infra: 44.227.238.106 pic.twitter.com/HzTga1OvNK
— harry.eth (whg.eth) (@sniko_) May 22, 2022

The phishing links were up on Beeple’s Twitter for around five hours and on-chain analysis of one of the scammers' wallets shows the first phishing link scored them 36 Ethereum (ETH) worth roughly $73,000 at the time.

The second link netted the scammers around $365,000 worth of ETH and NFTs from high-value collections such as the Mutant Ape Yacht Club, VeeFriends, and Otherdeeds amongst others bringing the grand total value stolen from the scam to around $438,000.

On-chain data shows the scammer selling the NFTs on OpenSea and putting their stolen ETH into a crypto mixer in an attempt to launder the gains.

Beeple later tweeted that he had regained control of his account and added to remind his followers that “anything too good to be true IS A F*CKING SCAM.”

ugh we’ll that was fun way to wake up.

Twitter was hacked but we have control now. Huge thanks to @garyvee ‘a team for quick help!!!!
— beeple (@beeple) May 22, 2022

Beeple has created three of the top ten most expensive NFTs sold to date including one which sold for $69.3 million, the most expensive ever sold to a sole owner. This attention has made him a target for hacks.

In November 2021, an admin account on Beeple’s Discord was hacked with scammers there also promoting a similarly fake NFT drop which resulted in users losing around 38 ETH.

Earlier this month, cybersecurity firm Malwarebytes released a report which highlighted a rise in phishing attempts as scammers try to cash in on NFT hype. The firm noted the use of fraudulent websites depicted as legitimate platforms is the most common tactic used by scammers.