Examining real-world cases of financial fraud: lessons learned and strategies for prevention
It is not possible to get back scammed crypto. If you have been a victim of a crypto scam, the best course of action is to find your transaction IDs, write a narrative, prepare to prove ownership, and contact law enforcement.
To track where your funds went, please follow these steps:
Go to https://explorer.bitquery.io/ Paste your wallet address and search
When you click on an address, there will be a tab that says “Money Flow”. Using this, we can clearly see inbound and outbound transactions. Click on it.
You will be able to trace the funds in and out by adjusting the “inbound” and ‘outbound” depths on the graph as shown in the screenshot below.
You can use this information to contact the appropriate law enforcement agencies or organizations.
Common Scams and Precautions to be Taken
Case Study 1: Fake Mining Sites
Around the same time last year, a new scam emerged involving fake “mining” sites that encourage users to join a “node”. These sites typically target mobile users and their USDT tokens. After requesting access to the user’s wallet and receiving approval, the site steals their tokens. Despite this, the site will display what appears to be rewards in an effort to convince the user to send more funds. Once the user approves access, their tokens are immediately stolen.
When engaging with sites or apps that request wallet access. It is better to do your research before connecting your wallet with the site.
In case any site requests a transfer of funds, please check and do thorough research on the address they have mentioned.
Use the explorer mentioned above to check any addresses you are suspicious of. Do you see any transactions in and out of the wallet? Is it a cold wallet?
Additionally, it is important to be cautious of any promises of high returns on investments, as these are often too good to be true. It is also recommended to use a hardware wallet or a trusted software wallet with two-factor authentication enabled to protect your tokens.
If you have already fallen victim to a fake mining site, it is crucial to report the incident to the relevant authorities and seek assistance from your wallet provider. It is also important to spread awareness of these scams to prevent others from falling victim.
Case Study 2: KYC Info Collection
On February 13 2023, MetaMask, the popular crypto wallet provider, issued a warning to its users regarding ongoing phishing attempts by scammers who are contacting users through Namecheap’s third-party upstream system for emails. This comes after Namecheap detected the misuse of its email gateway, which targeted MetaMask users.
The phishing emails contain a link to a fake MetaMask website, which asks users to provide their secret recovery phrase to keep their wallets secure. However, MetaMask has reminded its users that it will never collect their Know Your Customer (KYC) information, and will never reach out over email to discuss account details.
If you are one such recipient of these emails, please check the email domain and contents for any signs of scams.
MetaMask has advised its users to avoid sharing their seed phrases with anyone, as this would give complete control of their funds to the hackers.
How cross-chain bridges complicate tracking funds
A blockchain bridge is a tool that enables the transfer of assets and data between two different blockchain ecosystems. It acts like a physical bridge, allowing users to cross from one blockchain to another. Companies such as CBridge, Synapse, and Portal are examples of these “cross-chain bridges.” that facilitate the transfer of assets and data between layer-1 and layer-2 networks, as well as between different blockchain networks.
It is more difficult to track the flow of scammed funds across multiple blockchains when criminals use these bridges. By tracking the transactions associated with these services, it may be possible to determine the source of the funds, even if they are mixed or obscured. However, it’s important to note that the effectiveness of this approach will depend on the specific circumstances of the case and that criminals may use additional methods to further obscure their activities.
In conclusion, always exercise caution when dealing with online platforms that involve cryptocurrency transactions. Do your due diligence, use trusted wallets, and never share your private keys or seed phrases with anyone. By staying informed and vigilant, you can protect yourself from falling prey to scams and fraudulent activities in the crypto space.