Over the past year and half, Bitcoin and its companions in the crypto-market have been a hot topic around the world. Bitcoin aka the king coin hit an all-time high of nearly $69,000, and the market cap hit a high of $3 trillion. The tremendous growth in its price and innovation has had people taking a keen interest in the market movements around the world.
Interestingly, this was the first time the cryptocurrency managed to garner everyone’s attention. The same occurred in 2017, when the coin rallied up to hit a high of nearly $20,000, a moment that seems like it happened just yesterday for many active participants in the crypto-space.
What sets this bull run apart from the last is the innovation that rallied along with the price. The past year saw blockchain technology disrupting several industries, with the main impact dealt on the art sector with the emergence of NFTs. This emergence pushed several notable artists, celebrities, and athletes into the space.
All the hype and noise created because of notable participants and massive price movements has, in turn, seen more and more people dipping their toe in this emerging digital space. While the growth in adoption is a positive sign for the future of cryptocurrencies, the rise in price, however, has also resulted in a rise in scams.
The resurgence of scammers
Crypto-scams have resulted in hundreds of investors losing a significant amount of money, with the year 2021 registering a total of $14 billion stolen in crypto by scammers. Now, the presence of scammers profiting off of gullible investors is not a new tale in the crypto-space. It is a factor that has been present for years now.
Back in 2017, the most famous way to scam investors was by luring them with ‘giveaway’ offers. This strategy saw scammers impersonate a notable personality and announce a crypto-giveaway, with the participation rules demanding investors deposit a certain amount of crypto to a wallet address. Once deposited, they would take off with the money. This was followed by Sim swaps and other methods to steal a person’s crypto.
While this method still exists, its effectiveness over the years has diminished to a great extent over the years owing to constant attention brought to it by influencers and media outlets. However, time has led to a change in plans. These days scammers have been reported of using various methods to deceive naïve users.
The New Game Plan
Over the last year, the cryptocurrency space has seen various methods deployed by scammers to scam investors. This includes romance scams, investment scams, chargeback scams, fake receipt scams, phishing scams, QR code scams, among others.
In India, a combination of new and old methods has been making waves among novice investors. These scammers, reported to be operating on an international scale with its webs having local presence, are making use of fake news, websites, and prominent celebrities and crypto-firms to leech off of investors.
The most prominent celebrity used by nefarious actors is the Bollywood celebrity – Amitabh Bachchan aka Big B – who is often broadcasted promoting “a new cryptocurrency auto-trading program called Bitcoin Loophole” in a fake interview. Notably, while the Big B advertisement itself is fake, scammers are going around publishing news on ‘Bitcoin Loophole’ being authentic on some mainstream news portals as an ad.
Once the scammers get a hold of the user base via this scam, they are enquired on whether they have a Binance account, and if not, asked to create one. If questioned about the need for one, they are told that the trading fees are usually 2x on other platforms compared to Binance. Post this, users are asked to purchase USDT – the top stablecoin – and transfer to a platform completely controlled by them.
The rise of crypto-prices has resulted in the rise of firms supporting the crypto-market like Binance – a cryptocurrency and blockchain technology infrastructure provider. The exchange has recorded tremendous growth in the past years, owing to its user-first policy and quick action in on-boarding any products required by its user base.
The exchange’s popularity has grown to an extent wherein it records over $150 billion transaction a day. The massive volume on the exchange has made it a hub for traders and investors seeking good liquidity and a safe platform. And, while the exchange is sought-out by good actors, it has been used by nefarious actors too, like the ones reported above.
Nonetheless, the exchange has been at the forefront of recognizing such actors and reporting the activities to concerned regulatory authorities. Last year alone, the exchange was part of the crackdown on two very significant bad actors. The first involved nested exchanges and the second involved ransomware attackers responsible for damage worth around $500 million.
Notably, Binance identified nefarious actors present on its platform by deploying a two-pronged approach. First, its detection system identified and off-boarded suspicious accounts and second, it collaborated with law enforcement to bring down criminal groups. Additionally, the exchange notified its users if they were detected to have a connection to nested exchanges.
Both cases saw the exchange collaborating with some regulatory authorities including Cyber Police of Ukraine, Cyber Bureau of Korean National Police Agency, Swiss Federal Office of Police, and US Law Enforcement. The exchange has also started to implement one of the top-notch AML/ KYC policies aimed at curbing such activities.
In the case of Binance being availed by scammers in India, a spokesperson noted in a report,
“We follow certain systems when we detect or tract illicit activities. We are also trying to combat criminals with the help of an in-house system.”
Taking a step ahead in the game, the exchange has partnered with TRM Labs, a leading crypto-compliance and risk management firm, along with implementing its chain analyzer on its platform. In addition to TRM Labs, the crypto-service provider has also joined hands with Crystal – blockchain analytics company.
Moreover, the exchange has recognized that while crypto-scammers can’t be controlled, its entry and exit points could be closed. As such, Binance regularly conducts audit checks, which includes risk scoring and analysis of funds flow.
Disclaimer: This is a paid post and should not be considered news/advice