Top Crypto Scams Targeting Businesses in 2023

Crypto scams are nothing new, but scams in this category have reached new heights. More than 4,000 of the largest cryptocurrency accounts have obtained their income through illegal means, and cryptocriminals now make up 3.7% of the world’s crypto millionaires. How do you protect yourself from scammers who use cryptocurrency to trick unsuspecting victims?

For April Fools’ Day 2023, we list four such crypto scams to protect against:

1. Crypto rip offers target startups and web3 entrepreneurs

There are several new web3 companies working on many new ideas. However, many of these projects do not see the light of day due to a lack of finance. A new generation of crypto scammers see this as a potential opening to prey on distressed businesses that are financially vulnerable.

Fraudsters often pose as seed capitalists or small-scale venture capitalists. Usually, they seek out the creators of companies looking for investment using networking sites. They ask for a number of details, including proof of concept, road map, etc. But in the final phase, they require the firm to present proof of assets before the investment is made.

To provide this proof of funds, the scammers ask victims to set up a new wallet and transfer money. Yet, after the funds are transferred, the wallet mysteriously empties.

Ahad Shams, co-founder of Webaverse, provided one of the most famous cases of this cryptocurrency scam. According to him, the thieves stole $4 million in stablecoins from the wallet he established to offer proof of payment.

The uniqueness of Shams’ case appears to be that he constructed a new Trust Wallet, a well-known Binance alternative for storing cryptocurrency.

Also, Shams created the wallet personally and had full access to its private keys. The first and only action the fraudster took was to photograph the wallet balance. There was no need to worry as no important information was visible on the dashboard of the wallet. The scammer then excused himself, left and never returned. When Shams then checked his wallet, the funds were gone.

The most effective defense against these crypto scams is to be suspicious of unsolicited investment proposals. Always conduct exhaustive and careful research on any potential investor looking at your project. Anyone asking you to create a new wallet – and not use your existing one – should be viewed with suspicion.

2. Crypto scammers lure employees through Google Workspace comments

Avanan, a cybersecurity firm, has recently uncovered a campaign aimed at luring customers into bitcoin scams. As reported by the organization, business email compromise (BEC) was able to target nearly 1,000 companies in just 14 days, which equates to an average of seventy businesses every day.

This crypto scam is different from other scams of its kind as it can use legitimate solutions and does not need them to impersonate any brand.

Using the commenting feature provided in Google Workspace, attackers distribute spam redirects. The scammer’s website link is produced by Google Script, a software tool that aids in the development of legitimate business applications. The victim is directed to a fake cryptocurrency website.

Fraudsters begin their operation by creating a Google account, which they then use to publish comments using Google Sheets, where malicious links are included. Potential victims are then lured into accessing the associated URL. The abuses can be direct, including instant theft of wallet credentials, or their cryptocurrency accounts can be used for mining.

What is frightening is that the whole fraudulent scheme will be carried out in the garb of an official enterprise, shielded by the reliability of the services. Not only customers, but even security providers, will not be able to recognize them as fraud.

Cross-checking the email addresses available in the comments is the only method to avoid such crypto scam attacks. Grammatical errors, which are typical in fraudulent messages, can also be investigated. If you are still unsure about the validity of the communication, ask the sender if it was intended for you; the scammer probably won’t answer.

3. Crypto fraudsters use airdrops to steal millions from reputable crypto exchanges

Popular decentralized cryptocurrency exchange Uniswap lost almost $8 million worth of Ethereum due to a sophisticated phishing attempt in this massive crypto scam. The threat actors exploited the lure of free UNI tokens (delivered via airdrops) to trick users into authorizing a transaction that gave hackers full access to victims’ wallets.

The trap was a camouflaged “setApprovalForAll” mechanism that grants or revokes the operator’s full approval rights, thereby enabling the hacker to redeem any Uniswap v3 LP token in the victim’s wallet for ETH. The purpose was to direct recipients to a fraudulent website hosted on the name “uniswaplp[.]com,” impersonating the legitimate Uniswap domain “uniswap.org.” In total, the fraudsters moved 7,574 ETH to an account under their control!

Both crypto exchange operators and customers must take precautions against such schemes. When clicking any button while receiving an airdrop, consumers must confirm everything, starting with the domain names of the destination pages. Businesses must also keep a close eye on fraudsters and impersonators who cause not only financial losses but also irreparable reputational damage.

4. Crypt carpet covers take advantage of the hype surrounding new coins

Rug pulls are a type of exit fraud that DeFi and NFTs are highly susceptible to. When you combine the fact that DeFi eliminates middlemen from monetary transactions with the relative ease of issuing a new token, you have an environment ripe for exploitation by fraudsters.

Without undergoing a code audit or any other kind of background check, fraudsters can quickly generate a crypto token and have it published on a decentralized exchange (DEX). Nearly 117,000 fake tokens were generated between January and December 2022, looting the equivalent of billions of dollars from unwitting investors.

Often the price of newly listed currencies rises, and enthusiastic speculators can use criteria such as “recently added” or “top winners” to search for new, trendy coins without doing any research on the projects. Whenever the creators of the fake cryptocurrency scheme determine that the value has reached, they will disappear with investor funds, leaving coin holders with no value.

Research is the best approach to prevent this from happening. Follow the procedures to properly investigate each new cryptocurrency and NFT project, especially with regard to the white paper – which attempts to explain the nature and validity of the project – and the founders. The absence of these safeguards is a red flag.

No More April Fool’s: Security Products to Combat Crypto Scams on the Rise

Even as fraudsters take advantage of the hype (and lack of regulation) surrounding crypto, major industries are also stepping up to provide better security measures. Mastercard, for example, intends to offer a new piece of software that helps banks identify and block transactions from fraudulent cryptocurrency exchanges.

The solution, called Crypto Safe, uses “advanced” AI algorithms to assess the risk of criminal activity associated with crypto trades on Mastercard’s payment network. The system uses data from the entire blockchain, an open ledger of crypto transactions, in addition to information from other sources. CipherTrace, the blockchain security company that Mastercard acquired last year, operates this service.

Dextools is also an excellent platform to quickly determine the status of a token and it is compatible with Ethereum as well as Binance Chain. After a search for the token contract address, users will be able to organize the list of all token purchases and sales by selecting the “Type” column. There is a probability that you are witnessing a blanket move if you do not observe any sell orders.

Last thought

April Fools’ Day (and the beginning of a new quarter) is a good time to take stock of the crypto segment, your commitment and your risk exposure. The market is full of crypto scams like rip deals, scams, phishing scams and more, often taking advantage of trusted channels. Just as you shouldn’t be intimidated by overcautious crypto trends and myths, it’s equally important not to be on the lookout for – and report – crypto scams!