Recent developments in the cryptocurrency space have highlighted the continued danger of fraud, particularly via social media.
High-profile hacks on X (formerly Twitter) have exposed a significant number of victim accounts promoting fake memecoins. These events highlight security vulnerabilities as well as the lengths to which scammers go to exploit unsuspecting users.
Large-scale computer hacks and their effects
Several well-known X accounts, including those of Lenovo India and Yahoo News UK, have been hacked to support a fictional memecoin known as HACKED.
According to blockchain researcher ZachXBT, investors were persuaded to purchase the fake coin from these hacked accounts.
Community Alert: A number of prominent accounts on X currently have their accounts compromised and are posting a meme coin scam. pic.twitter.com/8Bvaq59re5
— ZachXBT (@zachxbt) September 18, 2024
However, the scale of these accounts is considerable, and while they were able to avoid having their hacked accounts blocked, these hackers apparently did not make much money. According to some reports, they were only able to recover $8,000 from this scam.
This is not a new trend. Last month, hackers compromised French footballer Kylian Mbappé’s account to advertise a fake cryptocurrency.
Such high-profile celebrity cloning and successful scams are all part of a much larger trend in which famous people and legitimate businesses are used to both build credibility and gain the trust of victims.
The use of compromised accounts highlights an extreme weakness in social media security features that bad actors are taking advantage of.
As of today, the market cap of cryptocurrencies stood at $2.10 trillion. Chart: TradingView.com
The mechanisms of cryptographic fraud
These scams use social engineering to trick victims into acting rashly. Scammers impersonate celebrities or organizations to create a sense of urgency and authenticity.
They may guarantee high returns on investments or offer exclusive access to limited-time opportunities. For example, victims may be encouraged to invest in a new cryptocurrency with promises of quick profits, only to find themselves unable to withdraw their funds.
They often fall for seemingly innocuous social media interactions. But the most common case is that of hackers who take over friends’ accounts and write to them asking them to invest through that account. This technique exploits trust and familiarity, making it easier for scammers to convince people to part with their money.
Update: So far it seems that the scammers probably lost money buying this method as the top traders barely made around $1,000 and the market cap is $67,000.
Although few details are available, I assume that all of these accounts have given permissions to the same site/app.
Reminder to always go… pic.twitter.com/gZcynD9rrV
— ZachXBT (@zachxbt) September 18, 2024
Safety measures and public awareness
As these scams continue to multiply, it becomes more important to raise awareness among the community. Experts like ZachXBT advise regularly checking account permissions and disconnecting unused apps to avoid putting users at risk due to account breaches.
Additionally, educating users on common red flags of scams, including at least those related to poorly written communication and promises of guaranteed returns, enables users to make effective decisions.
The regulation also targets cryptocurrency fraud. The California Department of Financial Protection and Innovation (DFPI) tracks and reports various frauds, helping victims report them and get help. As the cryptocurrency landscape evolves, so must strategies to protect users from these sophisticated schemes.
Recent hacks have proven that scammers are struggling to succeed thanks to large-scale security breaches, but many people are still at risk of suffering heavy losses. Users can better defend themselves against the ever-evolving risks of cryptocurrencies by remaining vigilant and cautious.
Featured image from Britannica, chart from TradingView
