The FBI has warned cryptocurrency owners and would-be owners of a scam involving bogus liquidity mining that the bureau says has cost victims more than $70 million in combined losses since 2019.
Liquidity mining is an investment strategy that appears to reward investors for contributing a portion of their crypto assets to a pool, which provides traders with the necessary liquidity to complete trades. And in return, each investor receives a percentage of the profits, thereby earning money without making active investment decisions. Or rather, it is the promise.
Fraudsters are targeting Tether and Ethereum owners in this scam and are finding victims through just about any means possible – direct messages, social media, dating apps, messaging services and word of mouth, according to an FBI alert [PDF] this week.
Scammers spend a few days or weeks building relationships with their victims, then give them a quick cryptocurrency tutorial (if they don’t already have tokens), and finally trick them into mining cash by dangling them a daily return of 1 to 3%. on investment guarantees.
The scammers don’t discriminate between individuals who own cryptocurrency or not, and the scheme doesn’t require a minimum investment, allowing victims to “invest” (read: lose) as much digital currency as they want. wish.
After successfully linking their crypto wallets to fake cash mining apps, the scammers then wipe out the victims’ funds by moving the digital coins into their own wallets.
After realizing that their money has been stolen and not actually invested, victims usually contact the wallet provider or customer service portal on the scam app. “People claiming to be customer service representatives for the scam may present one of many explanations as to where the money went and why it is no longer accessible, culminating in the claim that the victim must deposit additional funds in order to recover their money,” the FBI noted.
Unsurprisingly, depositing more funds does not allow victims to get their money back.
Despite dire warnings that a crypto winter is coming, or already here, cryptocurrency and NFT scams are still proving profitable for scammers and fake cash mining apps are just the latest example that the criminals will find a way to make money, be it paper money or bitcoins.
A report released earlier this year by blockchain watchers Chainalysis noted that cryptocurrency-based crime hit an all-time high in 2021, with illicit addresses receiving $14 billion, representing an increase of 79% year over year. To be fair, overall transaction volume has exploded far more than criminal activity and is up 567% from 2020.
However, as more legitimate users try digital transactions, it’s a safe bet that scammers will follow the money.
Earlier this week, the FBI issued an alert about cybercriminals posing as legitimate investment firms and cryptocurrency exchanges, convincing people to download bogus apps and then deposit their tokens into wallets owned by the FBI. to crooks. To date, federal authorities have identified 244 victims of this particular scam, saying $42.7 million was stolen between October 2021 and May.
Meanwhile, law enforcement officials have pledged to crack down on this new wave of digital fraud and yesterday announced criminal charges against a former Coinbase official that could be the first-ever insider trading scheme by cryptocurrency in the United States. The action follows the first-ever insider trading lawsuit involving NFTs last month.
And while the support for these crimes may be new, the end result (for victims and scammers alike) remains the same – just like the FBI’s latest tip on how to avoid drowning in a data mining scam. cash: “Don’t send a payment to someone you’ve only talked to online, even if you think you’ve established a relationship with the person.” ®