With the growth of cryptocurrency a new market of cryptocurrency fraud has opened for criminals. From hackers trying to hack into crypto accounts to crypto mining. You may be a victim of cryptocurrency crime and not even know it!
If you are a an investor or want to opening your first crypto trade, you must know the security risks involved. If nothing else, it’ll help you prevent, identify, and limit the potential damage.
Cryptocurrency Fraud: A Modern Day Financial Epidemic
When thinking about crypto currency, most people naturally consider Bitcoin, which burst onto the scene in 2009 and grew at an exponential rate to reach highs of over $20,000 per coin in 2017. In the decade since BTC’s release, over 4,000 decentralized altcoins have been launched. Ethereum, Ripple, Litecoin et al. Have helped the industry become a multi-billion dollar industry.
The vast sums of money and assets highlight the main reason why hackers are keen to target investors. After all, their potential rewards are huge. However, there are many other reasons why hacking crypto is so attractive, including:
- Everything is online and decentralized. Fraudsters can do everything remotely while it’s difficult for victims to recover funds too.
- Many investors rarely check their crypto wallets or funds, seeing them as long-term investments, which means it can be months before they realize fraud has taken place.
- People promote Crypto currency as a safe and secure investment. This often lulls people into a false sense of security and results in inadequate security measures.
- Many investors handle their crypto activities via smartphone devices, offering fraudsters an additional route to successful hacks.
- Criminals and hackers may like to use Bitcoin for payments relating to unlawful activities due to the decentralized properties.
Unsurprisingly, Cryptocurrency fraud has grown parallel to the growth of the industry itself. According to the 2018 McAfee Labs Threats Report, Crypto mining grew by 4,000% in 2018. A similarly mind blowing statistic, CipherTrace has reported that Q1 of 2019 saw crypto fraud grow to more than $1.2B.
While it has been announced that global anti-money laundering (AML) and counter-terror financing (CTF) regulations are high on the agenda for global cybersecurity, there’s no doubt that individual cybersecurity personnel need to take responsibility by making safe crypto trading for clients a priority.
How Online Criminals Target Crypto Traders & Platforms
Once hailed as unhackable, blockchains and crypto wallets are now at risk of sophisticated hackers. Cyber criminals can do this through a number of methods that vary in degrees of complexity. All of them are serious dangers that cybersecurity experts and their clients need to understand.
Most scams and fraudulent activity may link to malware and ransomware. It infects the user’s systems as well as the systems of the crypto currency operator. In many cases, edits to code that infects the system with malicious files.
Perhaps the simplest and least sophisticated concept is cyber pick pocketing. This is when criminals gain unwanted access to a user’s account. Malware is put on the user’s computer and then steals the security keys a user needs to sign in and verify transactions relating to the crypto currency.
The decentralized elements mean that once the funds have left the account, they are almost impossible to get back. In some cases, hackers will change passwords and other features so that the user can’t gain access to their account. In other cases, they’ll simply clear the account of all coins.
Devices and accounts are also at risk from Ransomware. When this happens, user sees a message demanding a payment for the safe return of their crypto or other files.
Crypto Jacking & Mining
Mining is the process of adding Crypto coins to the block chain. Illicit activities involve criminals using malware to infect browsers and devices (PCs, mobiles, routers, etc.). Once infected, hackers will use those devices to actively mine crypto currency. This allows mining at far quicker rates. This then reduces their overhead to make more profit from the crypto arena.
While this type of fraudulent activity may not seem overly problematic for the victim (after all, they won’t be losing funds or their own crypto coins), the repercussions can be huge. The use of those computer resources can slow devices down as they will be processing the crypto mining activities in the background. Moreover, it can increase electricity bills and reduce the lifespan of the device.
Crypto jacking activities often go unnoticed by users. This is why all cyber security experts should pay extra attention to this aspect of the cryptocurrency activity.
Malicious Phone Apps
Most modern internet users should always question files before downloading them to their systems. However, many fail to extend this level of scrutiny to their smartphones. It’s very easy to assume that every product available on the various App marketplaces are legitimate and safe. Unfortunately, this isn’t always true, and is one area where hackers are beginning to thrive.
Over 600 Apps were blacklisted in 2018 due to this type of activity, with a specific focus on the crypto currency arena. While Apple, Google, et al. work tirelessly to rid their platforms of dangerous Apps, victims are constantly caught out by these Apps before they get discovered. Once the Apps are downloaded, they can infect the mobile with phishing, ransomware, and malware aimed at crypto jacking.
Over half of online actions are on mobile devices. It is no surprise that hackers are shifting to this platform.
Preventative Steps To Stop Cryptocurrency Fraud & Malware
Cryptocurrency fraud covers a wide spectrum of types and severity. In some cases, the damage is very small while others can see single users and enterprises lose millions. Moreover, the sheer thought personal details compromised can be very difficult for users – especially individual consumers – to accept.
While it is very difficult to prevent all cases of crypto currency fraud and malware infection, cyber security experts should prioritize prevention over reaction.
10 simple steps to reduce threats:
- Follow standard security practices. Especially on any financial product. This includes setting stronger passwords and using two-step authentication.
- Avoid accessing crypto wallets and accounts from public networks such as WiFi in public places as this can be another area where malware is infected.
- Only download files and mobile Apps from reputable and trustworthy sources. Avoid new apps at all costs.
- Store crypto currency coins on a hardware wallet. This works in a similar fashion to an external hard drive. Access and communication is not possible when there is no connection.
- Consider splitting crypto currency across several accounts and wallets. While it won’t stop crypto fraud, it can reduce the damage caused by phishing individual accounts.
- Use trusted bookmarks to access the websites and platforms used for trades, exchanges, and other crypto activities.
- Avoid promoting crypto activities on social media or in public forums as this attracts hackers.
- Operate with minimal amounts of crypto in online wallets and enforce delays on withdrawals combined with notifications. This allows users to spot and stop fraud.
- Use firewalls and antivirus software to identify potentially malicious software before they download to the systems.
- Close sessions in public spaces, including those that are running in the background of the device’s online sessions.
Prevention is the best form of protection. While it won’t stop all hacks, cybersecurity professionals should master these ideas while also promoting their importance to all clients.
Identifying Crypto Activity
First, never pay a ransom. Not only does this fund and encourage fraudsters, but there are no guarantees that they will return the account and files.
Cryptocurrency fraud doesn’t only happen to BTC owners, which is why everyone with any crypto coins should be sure to be aware of phishing scams and similar features. Meanwhile, the crypto jacking can even impact those that do not hold crypto coins. As such, the whole arena is of huge significance to all.
We must always remain vigilant. The sooner an issue is spotted, the sooner it can be rectified – whether that means recovering files, funds, and data or simply stopping the damage from growing any worse. The following tips may help:
- Know how to identify scam coins, which is also a preventative measure and can protect investment decisions as well as assets themselves.
- Log in daily just to check that the assets are still in the wallet.
- Pay attention to reduced performance levels of computers and devices, especially after downloading new Apps or files.
- Track all transactions from the crypto wallet to check that small amounts aren’t leaving the account.
- Follow the latest news stories to see whether a platform you use has been affected.
RECOVERING FROM CRYPTO FRAUD
Reporting fraudulent activities is vital, but the first step following a scam is to stop the damage from getting any worse. Even if this means temporarily locking the account, it is a task all cybersecurity experts should know how to complete.
With billions being traded each day, with new digital coins being mined too, the threats posed by fraudsters are greater than ever.
By taking the right steps to protect a client’s crypto portfolio, you can add a whole new dimension to your cyber security offerings. From using the preventative and responsive measures above to staying abreast of the latest information regarding the known breaches and the technologies used to combat those dangers, those steps will make you a far better cyber security professional.