Cryptocurrency Scams Surge: Investors Lose ₹33,000 Crore to Fake Accounts
Never Trust Someone Who Only Accepts Payment in Cryptocurrency
Cryptocurrency transactions are often perceived as secure due to the underlying blockchain technology. However, scammers exploit the public nature of this technology to deceive investors by learning their crypto addresses and orchestrating fraud. According to crypto trading platform Transak, fraudsters are increasingly capitalizing on the decentralized nature of digital currencies, with methods like “address poisoning” becoming popular among scammers.
What is Address Poisoning?
In a recent case, scammers used “address poisoning” to defraud a cryptocurrency trader of approximately $70 million (around 584 crores INR). The fraud resulted in about 97% of the trader’s assets being wiped out from their cryptocurrency wallet on the Coinbase platform.
How Does Address Poisoning Work?
In these types of scams, cybercriminals create a fake version of their target’s online cryptocurrency address. They then send a small amount of money to the victim’s legitimate address, which appears in the transaction history. The hope is that the victim will later mistakenly send funds to the fraudulent address, thinking it’s their own or a trusted address.
Rise in Cryptocurrency Scams
According to the FBI’s 2023 Internet Crime Report, cryptocurrency-related scams are on the rise globally. The report highlights that last year, investors lost $3.94 billion (approximately 33,000 crores INR) due to crypto-related fraud. This amount exceeds three-quarters of the total losses from investment-related scams in 2023. The Federal Trade Commission (FTC) notes that most criminals involved in cryptocurrency fraud prefer transactions in Bitcoin to obscure their activities.
Key Insights and Recommendations
Trust Issues: The best way to avoid falling victim to crypto scams is never to trust someone who only accepts payment in cryptocurrency or who promises substantial returns on dubious investments.
Common Scams: Investment scams are a primary method by which fraudsters deceive people into purchasing cryptocurrency and sending it to fake addresses. Scammers may also pose as businesses, government agencies, or even romantic partners to trick individuals.
Precautionary Measures:
- Verify Investment Opportunities: Be cautious of any investment that guarantees high returns with little risk, especially if it involves cryptocurrency.
- Double-Check Addresses: Always verify the cryptocurrency address before sending funds to ensure it’s legitimate.
- Use Reputable Platforms: Stick to well-known and established cryptocurrency platforms for buying, selling, and trading.
- Stay Informed: Keep up-to-date with the latest trends and common tactics used in crypto scams.
The Pig Butchering Scam: Investors Lose 626 Crores in Four Years
Online brokerage firm Zerodha’s CEO, Nitin Kamath, has issued a warning to investors about a new scam called “Pig Butchering.” According to Kamath, scammers from China and other Asian countries are creating thousands of fake websites that resemble those of Indian brokers’ sites or apps. These scammers deposit small amounts of money into the accounts of their targets, promising attractive returns.
How the Scam Works
- Initial Small Payments: Scammers lure investors by sending small payments to their accounts.
- Fake Investments: They then entice investors to invest in fake cryptocurrencies or other fraudulent schemes, promising high returns.
- Major Investments Disappear: Once the investor deposits a significant amount, the scammers vanish with the entire investment.
Impact on Investors
Over the past four years, this scam has led to losses amounting to 626 crores INR. The scam’s name, “Pig Butchering,” is derived from the process of fattening up the victim (the “pig”) before the ultimate scam (the “butchering”).
Key Recommendations
- Verify Websites: Always ensure you are using the official website or app of a brokerage firm.
- Be Skeptical of High Returns: If an investment opportunity seems too good to be true, it probably is.
- Consult Reputable Sources: Before making significant investments, consult trusted financial advisors or use well-known and verified platforms.
- Stay Informed: Keep up-to-date with the latest scam tactics and warnings from credible sources.
By following these recommendations, investors can protect themselves from falling prey to such sophisticated scams.
Conclusion
Given these sophisticated methods of fraud, it is crucial to exercise caution and avoid relying solely on cryptocurrency for payments, especially with unknown entities. The decentralized and somewhat anonymous nature of cryptocurrency can make it a hotbed for such scams, leading to significant financial losses. Always verify addresses and consider additional layers of security to protect your assets.
