With many fraudulent Initial Coin Offerings (ICOs) flying around the crypto-sphere, it has become pretty difficult for crypto-asset investors to separate genuine cryptocurrency crowdsales from scams. Are you a cryptocurrency investor? If yes, Kaspersky, a Russia-based cybersecurity firm, wants you to learn new ways cryptocurrency scammers want defraud you.

Here Is The Report

According to a 2017 list of cryptocurrency scams, some social engineering schemes were set up by their issuers to defraud unsuspecting investors. In the end, these schemes ended up successful, thus duping many investors of millions of US dollars in cryptocurrency value.

The research conducted by Kaspersky’s team pointed to roughly 21,000 ETH (~$10M USD) stolen via scams and schemes in 2017. The report further revealed that the crypto-crime was conducted primarily in form of ICO and crypto-giveaways. Furthermore, it says these fraudsters received inspiration from the business models and successes of genuine cryptocurrency ventures.

Primary Targets

The targets of such social engineering schemes were mainly cryptocurrency investors who put their resources into startups. Their hopes, having a significant return on investment in the near future.

Regarding ICO scams, the report says, the con artists designed fraudulent websites and also created email addresses that were similar to those of well-known projects. In the end, a lot of these scams were successful.

Instances

A typical example of such ICO scam was Switcheo. This scam succeeded in stealing over $25,000 by promoting a misleading crypto address on Twitter. It then rerouted the funds generated through it from the official ICO wallet to a private wallet, where it remained untraceable.

Another example the team cited was the scam OmiseGo project. This project was very popular on Ethereum the ecosystem. It worked just as Switcheo, duping unsuspecting users of their hard-earned virtual currencies worth $1.1 million. The report said that it was one of the most damaging social engineering schemes to date.

While explaining how the giveaway scams worked, the report said that these scammers create social accounts of celebrities, entrepreneurs and cryptocurrency founders. The example that easily comes to mind involves Twitter accounts giving away ether, which requested interested people to send a fewer number of ether to a particular wallet to get more ether in reward. Well, some people fell for this and never got anything in return.

Another instance in the social engineering giveaway is the recent scam involving popular US automaker Elon Musk. In this case, somebody mimicked his Twitter account, and on learning about it, Mr. Musk had to call the scammers out on Twitter.

The cybersecurity firm’s report concluded by urging users to be wary of cryptocurrency wallets, offers, and exchanges.