What is a cryptophishing scam and how do you spot one?
The cryptocurrency market has gained notoriety due to the prevalence of fraudulent activities since its inception. Fraudsters use a variety of methods to trick cryptocurrency users and steal their hard-earned funds.
One such method is a cryptophishing scam, where fraudsters pretend to be a reputable source to gain access to users’ digital wallets. How can you detect this type of fraud and prevent it to protect your digital assets?
What is a cryptophishing scam?
Phishing is a well-known type of online attack that has been widespread for a long time. According to the 2022 FBI Internet Crime Report, phishing was the most common type of scheme affecting people, with 300,497 victims suffering losses of $52 million. This fraudulent practice has also extended to the cryptocurrency world.
A crypto phishing scam is a scheme that fraudsters use to obtain sensitive information, such as your wallet’s private key. They do this by pretending to be a trusted organization or individual and asking you for personal information. They then use the information you provide to steal your digital assets.
In recent years, the incidence of cryptophishing scams has been increasing. In February 2023, a popular crypto hardware wallet maker, Trezor, warned of a widespread crypto-phishing attack. Fraudsters targeted Trezor users by sending them a fake security breach alert, asking them to reveal their recovery phrase, which the attackers could use to steal their crypto.
How do cryptocurrency phishing scams work?
Cryptocurrency phishing scams work quite similarly to conventional phishing attacks. The attackers usually contact cryptocurrency holders via SMS, email or phone, pretending to be a reputable source such as a crypto wallet provider or exchange. Their message usually contains an alert that appears to require the user’s immediate attention.
In addition, the message contains a fake link to a trusted company. These links are designed to distribute malware like ElectroRAT, which facilitates crypto theft. If you click on the link and enter your private key or other details, they will be transmitted directly to the scammers.
Crypto phishing allows fraudsters to gain easy access to your crypto wallet so they can easily transfer your money to different addresses.
How to spot a cryptophishing scam
Want to know how to spot a cryptophishing scam? Here are five signs you should look for to avoid becoming a victim:
- Cyber attackers usually send mass messages or emails without regard for spelling, grammar or structure. This makes grammatical errors the most obvious sign of a phishing message. Reputable companies take clear communication with customers seriously.
- Fraudsters often mimic the branding of legitimate firms, including their logos, color scheme, fonts and message tone. Therefore, it is important to familiarize yourself with the brand of the crypto companies you use.
- You should always check the URLs in the message, as phishers use links that may appear genuine but lead to unsafe websites.
- Always check the sender’s email address. Legitimate cryptocurrency companies usually communicate with their customers through a corporate email with their name instead of a public email like “@gmail.com.”
- Emails or messages asking for your login information are another indication of a potential phishing attack. Legitimate service providers never ask for your login information.
7 Types of Cryptophishing Scams
Knowing the different types of cryptophishing attacks can help you better detect them, as well as being aware of the indicators. Here are seven types of cryptophishing scams:
1. Spear phishing attacks
This type of phishing attack targets a specific person or crypto user associated with a specific company. The phisher creates personalized emails or messages that impersonate a person or a crypto company. They tailor the message to sound like it comes from an authentic source and persuade users to reveal sensitive information through a malware-infected URL.
2. Whaling attack
A whaling attack is similar to a spear attack, but only targets high-profile individuals, such as those in leadership positions or leaders of specific organizations such as CEOs or CFOs. These phishers prey on individuals who hold influential positions in organizations.
Since high-profile individuals hold influential positions in organizations, a successful whaling attack can significantly affect the entire organization. If a whaling attack targets a high-profile individual, it can put the organization’s entire crypto fund at risk. Therefore, these individuals must be vigilant and take the necessary measures to protect themselves and their organization against such attacks.
3. Clone phishing attacks
Another tactic used by scammers is the clone phishing attack, which targets people by sending them personalized emails based on their previous messages. Fraudsters try to imitate the original email by copying the tone, logos, color schemes and other elements to make the email seem familiar to the target audience. They persuade users to click on the malicious link, which can result in losing control of crypto assets.
4. Pharming attack
A pharming attack is a highly dangerous crypto scam carried out through DNS hijacking or infection. Attackers use sophisticated methods to exploit the DNS server and redirect users to a malware-infected URL. Although the URLs may appear legitimate, they may lead to fake websites, which may lead to the theft of users’ sensitive information or crypto assets.
5. Evil twin attack
An evil twin attack is a type of phishing scam where attackers replicate public Wi-Fi. They use the name of a public Wi-Fi network and when users connect their devices to the network, they ask users to provide their credentials. If users unknowingly enter their data, attackers can obtain their credentials and manipulate their crypto assets.
6. Ice-phishing
Ice phishing is a tactic fraudsters use to trick their targets into believing they are receiving a legitimate transaction request. The email lists the transaction and requires the user to confirm it by providing their private key.
In reality, there is no transaction and the user actually gives away their private key, resulting in the loss of crypto assets. Once the attackers have access to the private key, they can easily steal the funds.
7. Crypto Malware Attacks
Cryptocurrency phishing attacks can also introduce ransomware to their victims. Crypto-malware attacks are phishing scams where attackers send malicious software emails to their target audience.
The malware encrypts the victim’s files, and the attackers then demand a ransom to decrypt those files. Even if the victim pays the ransom, there is no guarantee that the attackers will decrypt the files. This type of attack can be extremely dangerous for individuals.
Beware of cryptophishing attacks
Phishing attacks are a growing concern in the crypto community. These attackers use various tactics to obtain sensitive information from unsuspecting individuals. They may pose as legitimate sources and ask for information about your wallet. Therefore, it is crucial to be aware of the warning signs of a crypto-phishing attack to protect yourself from becoming a victim of these scams.
It is also important to familiarize yourself with the different types of phishing attacks that attackers can use. To avoid these attacks, it is necessary to exercise caution when dealing with suspicious email links, untrusted websites and public Wi-Fi networks.
