Image credit: coolwallet.io
The world of crypto is buzzing with all sorts of users from traders to investors looking for the next 10x to people who use these tokens as a means of settling payments as well as malicious actors actively looking for ways to separate you from your money.
One of the many ways scammers use to steal crypto assets from unsuspecting owners is through phishing attacks. Unfortunately, phishing scams have been so successful that it was reported that scammers stole about $108 million through phishing scams in the first half of 2023 alone.
Phishing is a type of cryptocurrency scam aimed at deceptively persuading unsuspecting individuals to reveal their private keys or login details such as usernames and password.
In this scheme, the perpetrator often pretends to be a trustworthy entity or person, establishing a false sense of trust with the victim. Once the victim falls prey to the deception, the attacker use the obtained information to drain the victim's wallet.
Phishing does not exploit software vulnerabilities, rather it exploits human error and emotions, why spend hours trying to hack into a vault when you could just trick the owner to give you the keys.
Malicious actors send mass unsolicited emails or SMS to unsuspecting users mimicking or fronting as legitimate entities like crypto exchanges or wallets. Often these emails or messages target users of a specific protocol, wallet or crypto exchange.
These emails or messages usually contain links to fake websites that look identical to the real website.
The aim is to get the victim to click on the link and enter their login information or private keys believing they are accessing the real website.
The emails and messages are often sent under the false pretext of urgency or a requirement to change login details. Once the victim inputs their login information, the attacker obtains access to the user's account and drains it of all funds.
Unsuspecting users can also download malicious applications and browser extensions that resemble the real software and fall for phishing scams. In DeFi, a victim may also sign a transaction with a malicious protocol and unknowingly allow access to their wallet.
There are several types of phishing attacks and scammers are always coming up with new variations. Let's highlight some of the most prevalent:
Spear phishing is highly personalized and often involves extensive research on the intended victims. The attacker sends fake emails spoofed with malicious links tailored to specific individuals, groups of people or organizations.
This is one of the hardest phishing attacks to spot. This happens when users are redirected to a fake website even after entering the correct link or URL.
Attackers do this by infecting the DNS(Domain Name Server) server, which is responsible for converting URLs into IP addresses of websites with malicious code. When the DNS is hacked, entering even the correct link can send you to a fake website that usually looks similar to the real website
This happens when attackers send fake transactions that appear to be from a legitimate source to victims.
The transaction will require the victim to sign it with their private key, the goal is to trick the victim into signing a transaction that transfers authority over their tokens to the fraudster.
If the victim proceeds, they will unknowingly have transferred ownership of their tokens to the malicious actor.
These are malicious extensions designed to resemble legitimate ones, hackers may replicate popular browser wallets like MetaMask.
They are often used to steal sensitive information such as login credentials and dupe users into revealing their private keys. They can also redirect victims to fake websites or inject malware into their computers.
This is essentially when malicious actors impersonate legitimate brands by copying their logo, fonts and color scheme then use it to prepare fake emails or websites targeting users of that brand.
Some impersonate social media accounts of legitimate and popular crypto wallets, exchanges and protocols then spread fake links or act as customer support all in a bid to get users to reveal sensitive information
The logic here is that it is easier to create fake email addresses with a public domain than a corporate one.
To enhance security and minimize the risk of falling victim to phishing attacks or scams in the crypto space, it is advisable to employ a precautionary approach. Consider using a different wallet for routine engagements with decentralized finance (DeFi) protocols and airdrops. The majority of your assets should be stored in a primary wallet.
Regularly transfer only the necessary amount from your primary wallet to the designated one used for interactions with dApps and DeFi protocols. This precautionary measure ensures that in the unfortunate event of a phishing attack, potential losses are limited.
If you suspect that you have been a victim or need assistance dealing with a phishing attack or other cryptocurrency scams or hacks, then contact Hashlock, Australia's leading blockchain security and smart contract auditing firm.
[Author’s Note: This article does not represent financial advice, everything written here is strictly for educational and informational purposes. Please do your own research before investing.]
Author: Godwin Okhaifo