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Every new technological advance has two sides to its success story. One tells the tale of economic and social benefits that derive from it. The other one bears the ugly face of scamming, theft, and hoaxing. One clear example of this unofficial axiom is the surge in cryptocurrency scams that occurred throughout 2019.
According to a CypherTrace report, hackers managed to steal more than $4.4 billion from cryptocurrency owners and entities last year. It is a staggering increase from the total of $1.7 billion laundered during 2018. It shows digital fraudsters’ progress despite the efforts that cybersecurity developers put in to deliver better protection solutions.
A Brief Overview of the Crypto Market
The cryptocurrency market has met its ups and downs during its decade-long history. In recent years, it has attempted to join the “adults table” of traditional financial markets. It has managed somehow, while in others, it is still serving time at the “kids’ table.”
The cryptocurrency industry has a market capitalization that has oscillated between $108 billion and $467 billion in the last two years. Right now, it stands at $200 billion, and it reached its highest peak just before the 2017 Bitcoin crash at roughly $781 billion.
The crypto market is a mammoth industry that continues to attract investors and developers consistently. Its problem is that it struggles to deliver protection solutions at the same pace at which it delivers technological innovations.
Just to put things into perspective, according to the same CypherTrace report, by March 2019, the hackers had managed to steal through various methods approximately $1.2 billion. It fell short by $500 million of the entire amount stolen in 2018. The entire sum of laundered cryptos became four times larger by the end of the year.
Crypto Scams in 2019
With these figures, it may seem that the lights are on for the investors outside the industry, but nobody’s home. Unfortunately, the scammers figured that out, and they also discovered that the doors are wide open.
Here are just a few of the major 2019 cryptocurrency scams, thefts, and hacker attacks that made the headlines in the news:
- January – In India, more than $71.6 million are scammed in an ICO Fraud.
- May – Binance reported that more than $40 million were stolen from its users’ wallets
- June – XRP worth $10 million stolen from GitHub
- June – The Europol arrests six people for a typosquatting scam through which they had allegedly stolen $27 million.
- July – Bitpoint announces that hackers stole at least $28 million from its users.
- December – More than $114 million stolen in Bulgaria-Based Illegal Trading Operation
According to CypherTrace, Bitcoin pays the price for its global popularity and holds the first position in the top of the most stolen cryptocurrency. In more than 76% of the cases, the scammers attempted or succeeded in stealing BTC. Ethereum Classic (ETC) comes in second place at a considerable distance, with only 7% of the cases involving attacks on its owners and investors.
The Year of the Exit Scam – How Crypto Hackers Operate
The virtual thieves that prey on the cryptocurrency market stop at nothing to achieve their goals. They launch attacks on anything from international exchanges to wallets and other cryptocurrency storage services.
Their hacking methods vary, but most of the time, they come in the form of a lethal cocktail that can include:
- URL hijacking
- SIM swapping
- Email scamming
Their mission is personal data theft, and they are looking for anything that can reveal private keys to cryptocurrency wallets. Generally, they launch the attacks at numerous targets concomitantly and compromise as many accounts as possible.
One of the most successful ways cybercriminals have managed to extort billions of dollars lately is the Exit Scam Strategy.
Exit Scam implies the release of a fake White Paper for an upcoming cryptocurrency project. Usually, the proposal features professional design and “overwhelming” community support. Its developers try to raise funds for its official launch through an Initial Coin Offering (ICO), IEO, or STO. The scam is complete when the so-called developers disappear with the investors’ money, and the whole project vanishes into thin air.
How to Avoid Cryptocurrency Scams
As hard as security developers may try to increase digital assets protection, you have the first responsibility to keep your crypto wallets safe. Here are a few tips that will help you avoid cryptocurrency scams:
Watch out for cloned URLs
Hackers clone website addresses all the time. Be careful before accessing a link that may look very similar to an exchange or a hot wallet platform. Your best choice is to type in the URL every time you visit a directory that is crucial for your digital assets’ safety.
Do not install unknown apps.
Google Play and the Apple App Store are full of eye-catching applications that seem to provide plenty of user-friendly features to crypto enthusiasts. Make sure that you do your due diligence and research heavily an app before installing it.
Look out for scam emails.
Electronic mail has been the scammers’ favorite operational tool ever since the release of the internet. Cybercriminals can engage in phishing, identity theft, and, more recently, cryptocurrency hacking through emails.
Keep an eye out for random emails that may seem to arrive from the cryptocurrency services you normally use. Always check twice the sender’s address to ensure that it comes from an authentic source, and never click on links that are part of suspicious messages.