Gone are the days when only newcomers were victims of phishing attempts. Today, even the most seasoned crypto veterans find themselves being targeted by ingenious scams.
Scamming strategies get more sophisticated by the minute, with fake airdrops, for example, appealing to crypto investors promising juicy rewards. All it takes is falling for the ‘claim your free token’ post and connecting your wallet to a malicious application, and you’ll see your assets gone. In 2023 alone, an astounding $4.6 billion was lost to scams that crypto wallets can prevent.
The good part is the transparent nature of blockchain technology and the security measures implemented by its players creates a fertile ground for identifying and mitigating these threats.
Together with Coinspect, a cybersecurity company that specializes in crypto projects, we’re sharing with you the key security features a wallet should have to prevent you from becoming a victim of this type of attacks. Their latest research on wallet security will offer investors concrete ways to evaluate their wallets security, providing the insights needed to choose one.
As we explore the world of social engineering in crypto, we’ll see how these features can be game-changers in protecting digital assets.
Common Social Engineering Tactics in Crypto Scams
Scammers use a variety of sophisticated social engineering techniques to target crypto investors:
Phishing Scams
Phishing is one of the most widespread crypto scams, where fraudsters disguise themselves as legitimate entities, like exchanges or DeFi platforms, to trick investors into divulging private keys. These scams often come in the form of emails, texts, or even fake websites urging investors to “verify” their wallets or participate in exclusive offers.
Impersonation
Scammers frequently pose as well-known figures—crypto influencers, tech support reps, or even project founders. They reach out to investors through social media or direct messages, offering fake support or investment advice. Once trust is established, the scammer requests access to your wallet or private information. They may also trick you into installing malware or remote access software under the promise of “fixing” issues or offering exclusive opportunities. Once installed, they can steal private information or control your computer.
Social Media Scams
Crypto investors are increasingly targeted through fake social media ads or cloned profiles. These fraudulent ads often promote “too good to be true” investment opportunities, air drops, or urgent requests to secure funds.
Rug Pulls and Fake ICOs
New and seasoned investors alike can fall victim to rug pulls, where a seemingly promising project quickly raises funds and then disappears. Similarly, scammers promote fake Initial Coin Offerings (ICOs) to trick people into investing in nonexistent or fraudulent projects.
How to Identify Social Engineering Red Flags
To protect yourself, be on the lookout for these warning signs:
- Unexpected urgency or pressure to act quickly
- Requests for personal information or wallet credentials
- Unsolicited investment opportunities or giveaways
- Unusual or misspelled domain names
- Promises of excessive returns
Practical Steps to Protect Against Social Engineering
A good way to reduce the chances of accidentally getting your wallet drained is by choosing a safe wallet to begin with. There are some key security features that can show you where your wallets stand against the most common threats. By understanding these features and how they protect you, you can make a better informed decision about which wallet to work with.
Threat prevention mechanisms: Wallets with threat prevention features can flag suspicious domains or known scammer addresses before you interact with them. This line of defense helps prevent you from connecting to malicious websites designed to steal your assets.
Social engineering tactics like phishing often rely on fraudulent websites or malicious contracts designed to steal your assets. The threat prevention mechanisms work by alerting you when you’re about to connect to a fake platform, stopping you from unknowingly giving away your private keys or authorizing a malicious transaction.
Intent verification systems: Make sure you use a wallet that includes intent verification features, providing clear summaries of actions you’re about to approve. This is particularly helpful against impersonation scams and fake tech support schemes, as they often trick you into approving transactions without realizing it, leaving you vulnerable to accidental or manipulated transactions.
Transaction Simulation: This feature allows you to preview potential outcomes and catch suspicious requests before approving them, so it doesn’t affect your assets. If something looks off, like unexpected transfers or approvals, you can spot the red flags before committing.
DApp permission controls: Social engineering scams often involve tricking you into connecting your wallet to malicious decentralized applications (dApps). Make sure your wallet has a dedicated permission control for dApps. This feature allows you to control and manage which dApps have access to your wallet and revoke permissions when necessary.
Stay Secure, Stay Ahead
Ultimately, the most powerful tool against social engineering is a healthy dose of skepticism. Always approach unexpected offers, urgent requests, or too-good-to-be-true opportunities with caution. Education and awareness play an important role; being informed about the signs of social engineering can help you recognize potential threats.
The crypto industry is continuously developing tools to minimize these evolving threats. Coinspect’s latest research into wallet security is a new approach to staying ahead of scammers. They provide a detailed framework to assess and compare the security levels of different wallets, making it easier for you to choose the right place for your assets. You can read more about it here.
Remember it’s not just about reacting to known threats, but about building a robust security mindset that can adapt to new challenges as they emerge.