Cryptocurrencies are a byproduct of blockchain technology that allows people to conduct financial transactions without the presence of a centralized authority like a bank. Since the introduction of Bitcoin in 2009, the cryptocurrency market has come a long way. At its peak, the aggregate market cap of the digital currency market was valued around $3 trillion.
However, there has been a considerable number of cryptocurrency scams throughout the years. Scammers are present in every field and industry where they can thug people into giving away their hard-earned money or in this case cryptocurrencies. Because most people in this day and age have a mobile phone, it increases the frequency of crypto scams among mobile phone owners. If you are also a mobile phone user who is interested in cryptocurrency investments this article can save you a lot of hassle.
What are Cryptocurrency Scams?
The main purpose of cryptocurrencies is to create a new financial infrastructure in the world that is more interactive, secure, efficient, cheaper, and scalable in comparison to the current financial markets. At present, most cryptocurrencies like Bitcoin and Ethereum are used as an inflation hedge or investment option rather than for daily payments.
However, with time infrastructure needed to make cryptocurrency payments more popular is increasing such as Bitcoin ATMs. On the other hand, many commercial enterprises have decided to allow crypto payment for their consumers to purchase products and services.
The popularity of cryptocurrencies has improved to the extent that there are thousands of cryptocurrency variants available on the market today. Keeping in view the increasing popularity of the new financial space, scammers have also entered the market to exploit the investors who lack knowledge or are ill-prepared to deal with any type of cryptocurrency scam.
What are Mobile-Based Cryptocurrency Scams?
One of the first remote communication devices was commercially used in WWII from 1939-to 1945 for military correspondence. Today cell phone networks and smartphone owners are available everywhere. People use their smartphones on an everyday basis. Among the many services that mobile phones allow their users to enjoy there is also access to cryptocurrency trading applications.
Since there are more mobile phone owners in the world in comparison to the laptop and Personal Computer owners the chances for scammers to steal digital currencies from the smartphones of their victims are higher. Therefore, scammers target the mobile phones of the users to gain access to the cryptocurrency reserves of the digital currency investors.
It is worth noting that with the arrival of 5G and the increasing capacity of a mobile phone to hold and store data, the ability to run heavy applications such as blockchain networks and cryptocurrency trading applications is increasing continuously. More businesses are trying to come up with software that will allow a greater number of users to access and trade their digital currencies via mobile phones.
Keeping these statistics in view, the scammers have focused their attention on going after the mobile phone users who are using their cell to conduct cryptocurrency trading or custodial services. In some cases, hackers try to break into the mobile phone of their victims to gain access to their mobile numbers or verified email addresses to break into the digital currency wallets present on other connected devices.
Is Your Mobile Phone Vulnerable to Cryptocurrency Scams?
The reason behind asking this question is not to raise panic or alarm among digital currency investors but to raise awareness. With the knowledge provided in this article, any mobile phone owner can safeguard themselves against cyber-attacks and scams. It is not wrong to say that even the best-operating systems in the world are vulnerable to hacking attempts. However, here are some channels that attackers can use to breach your mobile network:
Every person who owns a mobile phone uses a Wi-Fi network to access the internet. There are many cases where hackers were able to breach the personal information of a mobile owner when they connected to a public network or an insecure Wi-Fi connection.
Hackers can send spiked links to mobile users and get them to click on these URLs that are filled with malware and Trojan viruses. Hackers send such malware in the form of spam emails or mobile messages. It is best to not click on the link that an unknown user has sent you or a link that has arrived from any unknown service that you don’t use.
Sometimes, hackers present fake or fraudulent cryptocurrency applications on mobile application stores to trick users. The users who are looking for a certain company can mistakenly install a fake or fraudulent application that can steal cryptocurrencies from the mobile phone of the user directly, from other applications such as cryptocurrency wallets.
It is next to impossible to find a person today who does not have a social media account. Hackers can use social media accounts to gather personal information about their victims or send them malicious ware. There are several cases where fake social media influencers scammed people and stole their cryptocurrencies by getting them to invest in a Ponzi scheme or rugpull.
It is normal for a person to share their handsets with their friends or family members for sharing photos or other media. However, some people make the grave mistake of handing their unlocked devices to strangers who can be scammers. It takes less than a few minutes for the scammers to take control of a mobile operating system with the help of built-in app permissions that will enable them to steal cryptocurrency reserves on the set.
Are All Mobile Phones Vulnerable to Crypto Scams and Hack Attempts?
Hackers and scammers are finding new and innovative ways to crack the security of mobile phone applications. It is not possible to claim that any type of mobile device that is actively in use is 100% secure from the attacks of scammers or secure from cryptocurrency theft. However, by reading about the various types of mobile scams users can safeguard themselves from the possibility of getting scammed.
The information about how many types of mobile scams work and how to prevent them can enable every cryptocurrency owner to prepare for the battle against scammers. In the face of cryptocurrency mobile-related scams knowledge is power. A person who has awareness of the various methods that scammers use to breach a mobile phone can defend themselves better in comparison to the cellphone users who are oblivious about them.
The Biggest Mobile-Based Cryptocurrency Scams in History
BitConnect was a scam cryptocurrency exchange platform. Its founder Satish Kumbhani was charged by the Department of Justice in 2018 for orchestrating an international Ponzi scheme of $2 billion. BitConnect was able to spread among cryptocurrency proponents as a mobile phone application. It is worth noting that it was not malware or any other virus that was trying to use technology to steal the crypto reserves of the investors.
The exchange platform advertised itself as a legitimate business model and it was able to run for 2 years before getting caught. The people who were unable to understand the dynamics of investment and cryptocurrencies fell for this scam. At its peak, BitConnect projected a trading volume of $3.4 billion. To date, it is considered one of the biggest mobile crypto scams in the world.
The infamous incident of Michael Terpin is quite famous in the cryptocurrency community. Terpin is a well-known and seasoned investor. He is also no stranger to cryptocurrencies and blockchain networks due to his background in working with crypto exchanges. However, in 2019 Terpin reported that around $24 million worth of cryptocurrencies were stolen from his mobile wallet.
Upon investigation, Terpin found out that hackers were able to get hold of a duplicate SIM card from his network services provider AT & T. A disgruntled Michael took the matter to the court and filed a lawsuit against AT &T claiming that his cryptocurrency investment was wiped out due to the negligence of the mobile network operator. However, the court dismissed that case against AT & T. Later on police were able to apprehend a 24-year-old hacker named Ellis Pinksy and his partners who were tied to the incident and several other SIM swapping scams.
Social media influencer, FaZe Clan unwittingly participated in promoting an international Ponzi scheme called SaveTheKids. According to the media reports, FaZe Clan received payment to promote the fake token called SaveTheKids. The influencers later admitted that they did not conduct any type of research or perform their due diligence before marketing the scam coin.
With the help of mobile applications like Instagram and TikTok, FaZe Clan members managed to include millions of followers around the world to participate in the Ponzi scheme. Although there were no things like malware or Trojan viruses involved in this case. FaZe Clain members allowed scammers to get away with millions of dollars by marketing a pump and dump scheme on an international mobile network.
Identifying the Most Common Mobile Crypto Scams
There are millions of cryptocurrency traders in the world at present. A vast majority of all cryptocurrency investors perform crypto trading and monitoring via mobile applications. Therefore, it is important to learn about the most common ways that scammers deceive mobile users and discuss methods to prevent such incidents:
Clipping malware is a type of computer virus that affects the operating systems on a mobile phone device. The scammers try to get the mobile owners to download the malware. The malware can be mailed to the victim in the form of a fake email or a spam SMS. As soon as an unsuspecting victim clicks on the spiked link the malware is downloaded on their device.
The malware affects the functioning of the clipboard on a mobile phone. When the victim is trying to send cryptocurrency payment to their intended recipient, the malware replaces the original digital wallet address with a fake one that belongs to the hackers. For an average cryptocurrency trader, it is impossible to keep track of a long set of strings and detect if it has been swapped without their knowledge.
The best way to prevent clipping malware is to double-check any URL before clicking on it. Some anti-virus applications provide security to mobile users against any type of malware installation and detection. Another great way to prevent a wrong transaction is to check the last 10 or first 12 strings of the digital wallet address rather than relying entirely on a clipboard copied address.
Fake cryptocurrency applications have become a big issue for verified mobile application stores like Google Play and others. Scammers upload applications offering fake services to the users under the pretext of generating cryptocurrency returns for them. These applications do not perform any real services for their users and allow the hackers to gain access to sensitive information like email addresses, private keys, passwords, and mobile numbers of the victim.
There are some cases where these fake apps allow the scammers to spread pre-used public addresses among victims. When an unsuspecting user tries to use the public address their cryptocurrency reserves are deposited into the digital currency wallet of scammers.
The best way to prevent fake cryptocurrency applications is to verify that every public address is truly unique before using it for a transaction. When a digital currency wallet generates a new public address it is most likely to create a private key for backup. There are some cases where the crypto application developers do not issue private keys to the users however it is best to contact the developers and make sure that your public address is derived from one private key source with the verified developers.
- Copycat Crypto Trading Applications
The improving technology and cyber security protocol on the mobile application stores are making it more and more difficult for scammers to keep uploading fraudulent applications. However, there are many cases where the scammers were able to upload a copycat cryptocurrency application on the application store to trick the investors.
These scammers use the logo, font, and user interface of the legitimate cryptocurrency services providers to create fake versions of similar-looking applications. The unsuspecting users who want to start using the authentic application are tricked into downloading the fake application instead. These fake applications often promise fake returns to the users and do nothing in the background other than stealing digital currencies from the victims.
Scammers can even bypass 2-factor authentication of the 2FA method by using fake crypto applications. The hackers can break into the verified email addresses of the victims through their registered accounts on fake mobile applications. It is worth noting that fake applications that are impersonating legitimate crypto businesses often have a considerable number of bad reviews.
Furthermore, the number of fake application downloads is bound to be lower in comparison to the real deal. Users can also check the rankings of the fake application on the mobile app store which are naturally quite low on account of countless bad reviews and consumer complaints. Users are also advised to check the information about the developers or the publisher of these fake applications.
Additionally, 2FA authorization happening with the help of mobile numbers is more prone to security risks. It is better to switch to 2FA authentication applications provided by Google since they are 100% more secure against unwanted break-ins.
- Fraudulent Custodial Wallets and Giveaways
There are many cases where cryptocurrency users are tricked by scammers and hackers with fake cryptocurrency custodial wallets. In some cases, these fake applications are impersonating verified services providers and in other instances, they can claim to offer custodial options under the pretense of stealing the crypto reserves of their victims.
Likewise, there are many cases where cryptocurrency investors are lured in by scammers with false giveaway promises. In such cases, hackers or scammers use fake social media accounts to announce these scams and prompt their victims into sending a heavy amount of cryptocurrency to the digital currency address of the scammers with the promise of doubling it later. However, there is no legally binding agreement or regulator that can hold these scammers accountable for not keeping their part of the bargain.
There are also some cases where the hackers use fake application statistics to give the impression to the users that they are earning cryptocurrency coins or tokens for performing certain tasks like watching advertisements or giving 5-star reviews. In reality, these numbers are fabricated and the victims do not get any reward at the end of the day. Scammers also use the same bluff by claiming to offer crypto mining services for mobile users also known as Crypto Jacking apps.
Cryptocurrency mining requires highly specialized and sophisticated technology like ASICs that is currently unsupported on most mobile operating systems. Any type of cryptocurrency mining happening on a mobile phone is poor, harmful to the device, and costly. Once again, it is best to take extra caution before installing any fraudulent applications on your device.
- Wi-Fi Networks/SIM Swapping
Hackers use public Wi-Fi networks to spread malware among mobile users that have cryptocurrency wallets or exchange applications. By connecting to an insecure Wi-Fi network, the investors can become vulnerable to malware and unwarranted breaches.
SIM Swapping is a method where hackers can get hold of a duplicate copy of the SIM card of their victims by contacting the network providers. This type of scam requires a considerable amount of social engineering techniques rather than hacking skills.
It is ideal to never share a lot of personal information on social media accounts that can allow the hackers to guess and bypass the security check with the CS of the mobile network. Furthermore, take the extra step of using a unique password with your mobile network verification process that the hackers are unlikely to guess. There are 2FA verification applications like YubiKey, Authy, and Titan that are much more secure in comparison to the mobile number authentication method.