How to Keep Payment Fraud from Jeopardizing the Legitimacy of Blockchain
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A stunning 10% of all ICO proceeds wind up getting diverted to scammers. These scammers set up websites or social media profiles pretending to be the legitimate ICO provider, then disappear after selling fake “tokens” that never show up. One recent high-profile phishing incident targeted investors in Bee Token.
Scammers managed to obtain a list of emails belonging to potential investors who had already made initial contact with Bee Token, which made the scammers’ emails seem especially legitimate.
“Telegram’s recent blockbuster token sale raised $1.7 billion from private investors, but the company has made no public mention of a possible public sale. Scammers saw an opportunity and a rash of websites offering fake Telegram tokens to the public emerged, forcing Telegram founder Pavel Durov to warn followers on Twitter.”
— TheBoyCrypto (@TheBoyCrypto) January 16, 2018
Attention: Telegram publishes its official announcements only at https://t.co/ePcweVcGCP. Everything else is most likely scam.
— Pavel Durov (@durov) December 23, 2017
“Giveaways” and Stolen Identities
Phishers may also pose as crypto figureheads and announce “giveaways,” offering to send Ethereum or Bitcoin in return for a small initial deposit. Just as in the cash checking and “Nigerian Prince” scams that came before them, the scammers never actually make the promised second distribution.
A scammer who claimed the Twitter handle “elonmmusk” (just a letter off from the actual Elon Musk’s verified Twitter ID) used the social media platform to impersonate Musk and offer a “giveaway” of 5,000 ETH.
A network of bots promoted the tweet, giving it the appearance of groundswell support from enthused giveaway recipients. More recently hackers took over the official account of crypto company Vertcoin and announced a similarly structured “giveaway.” Because the giveaway was announced on the company’s official account, it appeared legitimate:
Hey, everyone! Vertcoin and staff are pleased to announce that we’re doing a 10 BTC giveaway to our followers to celebrate Vertcoin’s success. Send 0.005 to *REDACTED* enter! Winner will be announced 5/3/18 at 8pm EST.
— Vertcoin (@Vertcoin) May 1, 2018
Vertcoin Lead Developer had to take to Twitter much like many crypto founders and leaders before him to clarify that the giveaway was a scam.
— James Lovejoy (@jamesl22) May 1, 2018
Coral – A Predictive Analytics Tool
Coral is using predictive analytics tools to fight back against phishers. This platform is continuously scanning the crypto community and the Ethereum blockchain to detect phishing scams and other fraudulent activities. Coral users can submit a potential blockchain transaction to the Coral platform directly from their preferred wallet or exchange interface.
Coral uses a decentralized blockchain crawler called The Trawler to analyze each proposed transaction and assign it an Anonymous Blockchain Trust Score (ABTS). A high ABTS indicates a trustworthy partner for a blockchain transaction, while a low one suggests that the wallet may be involved in fraudulent activities.
Coral could flag, for example, if a crypto investor receives an email about the (theoretical) crypto company Weasel. Weasel might be offering tokens on their website weaseltoken (dot com), but the investor might receive an email directing them to vveaseltoken (dot) com.
The false URL would appear virtually the same as the first, and smart scammers could have designed the fake website to contain the same branding and design as the legitimate ICO. This scam could fool even experienced crypto traders.
“A user with Coral, however, could submit a proposed transmission of Ethereum or Bitcoin to the wallet listed on the fake website. Coral’s trawler would detect that this wallet has a history of handling funds involved in crypto scams, and assign it a lot trust ranking.”
Cover Photo by arvin febry on Unsplash
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