Bitcoin scams, cyber attacks and robberies – and how to avoid them

Scams

Here’s how cybercriminals target cryptocurrencies and how you can keep your bitcoin or other cryptocurrencies safe

April 15, 2024
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6 minutes Read

Bitcoin is on tears. The world’s largest digital currency by market capitalization surpassed its previous record value of nearly $69,000 in early March. It is now worth about $1.3 trillion. However, the fluctuating value of cryptocurrency does not necessarily correspond to the level of cybercrime activity we can observe. In fact, crypto threats have been thriving for years.

Right now, the cryptocurrency world is preparing for the bitcoin halving expected later this month. These events not only attract media attention and public interest in cryptocurrencies, but also attract malicious actors who seek to exploit the hype surrounding them to launch phishing scams or fraudulent investment schemes against unsuspecting individuals.

Let’s take a look at what you need to know and do to keep your digital currency safe.

Cryptocurrency risk takes various forms

Owning cryptocurrencies can be attractive to many, due to its (pseudo)anonymity, low transaction costs and as an alternative investment option. But the crypto space is also something of an unregulated Wild West. Threat actors are primed and ready to ruthlessly exploit any user without digital skills through sophisticated malware and scams. In some cases, they may bypass you altogether and attack cryptocurrency exchanges and other third parties.

We can divide the main threats into three types: malware, scams and third-party breaches.

1. Malware and harmful apps

According to the latest ESET Threat Report, detections of malware specifically designed to steal cryptocurrency from users’ wallets (cryptostealers) increased by 68% from the first to the second half of 2023. One of the most popular is Lumma Stealer, aka LummaC2 Stealer, which it targets digital wallets, user credentials, and even browser extensions with two-factor authentication (2FA). It also extracts information from compromised machines. Detections of this particular cryptostealer, provided as a service to cybercriminals, tripled between the first and second half of 2023.

Other cryptocurrency theft malware threats include:

• Cryptocurrency drainers: A type of malware designed to identify the value of assets in your wallets, use malicious smart contracts to quickly siphon funds, and then use mixers or multiple transfers to hide its tracks. One variant, MS Drainer, stole approximately $59 million over a nine-month period
• Common info-stealers like RedLine Stealer, Agent Tesla, and Racoon Stealer all have cryptostealing capabilities
• ClipBanker Trojans, another type of general information stealer, also exfiltrate cryptocurrency wallet account addresses
• Cryptocurrency stealing malware is often found hidden in fake apps. Recently, for example, ESET researchers found dozens of ClipBanker malware variants in WhatsApp and Telegram apps with trojans designed to steal crypto wallet addresses sent by users in their chat messages
• Botnet malware such as Amadey, DanaBot, and LaplasBanker may also contain functionality to steal crypto wallet information

2. Scams and social engineering

Sometimes bad actors forgo malware altogether and/or combine it with carefully crafted attacks designed to exploit our gullibility. Watch out for the following common scams targeting cryptocurrency:

• Phishing techniques they are often used to trick victims into clicking malicious links designed to steal information and funds from crypto wallets. In the case of cryptocurrency drainers, the first contact is often advertising on social media accounts spoofed to look like legitimate high-profile accounts. Users are then directed to a phishing website spoofed to look like a real token distribution platform and are then asked to connect their wallets to the site. The victim will then be presented with a (malicious) transaction to sign, which will automatically drain the funds from their wallet. In February, victims lost $47 million to this type of scam.
• celebrity impersonation It’s a common trick for scammers. They will create a fictitious social media account and impersonate famous people like Elon Musk to launch fake cryptocurrency giveaways or advertise fake investment opportunities. These accounts will contain malicious links and/or demand permanent crypto deposits from victims.
• Romantic fraud According to the FBI, scammers made more than $652 million last year. Scammers build relationships with their victims on dating sites and then make up a story, asking them for funds, possibly via hard-to-trace cryptocurrencies.
• Investment scams they are the highest-grossing type of cybercrime ever, with criminal revenue amounting to more than $4.5 billion in 2023, according to the FBI. Unsolicited emails or social media ads lure victims with the promise of large returns on their cryptocurrency investments. They usually link to a legitimate-looking investment app or website. However, it is all fake and your money will never be invested.
• Pig slaughter it’s a combination of romance and investment fraud. Victims are lulled into a false sense of security by scammers they meet on dating sites, who then try to convince them to invest in fictitious crypto schemes. Some may even pretend that the user is making money on their “investment” until they attempt to withdraw the funds. Last year, the U.S. Department of Justice seized more than $112 million from hog slaughter operators in one fell swoop.
• Pump and dump The schemes work when scammers invest in and then heavily promote a token/stock in order to drive up the price, before selling it at a profit and leaving real investors with almost worthless assets. Market manipulators of this type may have earned over $240 million last year by artificially inflating the value of Ethereum tokens.

3. Third-party hacks

Do you think your cryptocurrency is safe on an exchange or other legitimate third-party organization? Think again. Cybercrime groups and even nation states are targeting such entities with increasing frequency and success. According to United Nations estimates, North Korean hackers have stolen at least $3 billion in cryptocurrency since 2017, including $750 million last year alone. The lack of regulatory oversight makes it difficult to hold cryptocurrency exchanges accountable in the event of a serious breach, while the decentralized nature of the digital currency makes it difficult to recover funds.

It’s not just exchanges that could be targeted. Credentials stolen from password management company LastPass in 2022 may have been used to steal up to $35 million from security-conscious customers.

Crypto Defense 101

Fortunately, best security practices still apply in the world of cryptocurrencies. Consider the following to keep your virtual assets under lock and key.

• Only download apps from official app stores and never download pirated software
• Make sure your device has anti-malware software loaded from a reputable vendor
• Use a password manager for long, unique passwords across all accounts
• Use 2FA for your wallet and device
• Be skeptical: Don’t click links in unsolicited attachments or social media ads/posts, even if they appear to be from legitimate sources
• Store your cryptocurrency in a “cold wallet” (i.e. not connected to the internet) like Trezor, as this will insulate it from online threats
• Always do your research before making any investment in cryptocurrencies
• Always keep your devices and software up to date
• Avoid accessing public Wi-Fi without a virtual private network (VPN)
• Never send cryptocurrencies to strangers, even if you “met” them online
• Before choosing an exchange, do some research to check their security credentials
• Separate your cryptocurrency trading from your personal and work devices and accounts. This means using a dedicated email address for your wallet
• Don’t brag online about the size of your wallet/crypto wallet

Cybercriminals have obviously noticed the widespread fascination with cryptocurrencies and their staggering increase in value. After all, they tend to gravitate towards opportunities where significant financial gains are involved. Therefore, it is crucial that you remain alert and take other precautions to ensure that your cryptocurrencies stay out of the clutches of cyber criminals.