By
Grace
October 12, 2022
4 Min Read
Even though the Web3 space stands out with improved native security features of blockchain, the flow of cryptocurrency into the industry makes it a lucrative prospect for hackers and scammers. Without a bank to notify about suspicious transactions and with irreversible transfers and enthusiastic investors who often lack in-depth knowledge of crypto transactions, crypto scams are becoming a popular topic of concern. In this article, we’ll introduce you to crypto phishing attacks - one of the most frequent types of crypto scams.
Phishing is among the earliest forms of cyberattacks and has existed long before the emergence of blockchain and cryptocurrencies. In cryptocurrency, phishing attacks are a type of scam where the attacker deceives the victim and manipulates them into sharing their private keys or other sensitive information. The majority of phishing scams are conducted over email, but can also take place on social media or via text messages. The target could be a personal crypto wallet, initial coin offering or cryptocurrency exchange.
Regardless of the chosen channel, the hacker most often masquerades as an official entity, reputable source or legitimate person to win the victim’s trust. Once the victim has given up their personal details, the information is used to steal or transfer cryptocurrency funds.
To encourage the victim to share their private keys or personal details, the attacker most often sends an email or message that will resemble content that would normally be sent from a wallet, cryptocurrency exchange, or another legitimate source.
The message usually creates a sense of urgency that relies on fear and emotional responses. For example, the text may suggest that there is shady activity registered in their account or that there is a problem that requires instant login and resolution. The message normally contains a link that the victim is manipulated into clicking. After inputting their login details into the illegitimate link, the data is stolen and the victim is hacked.
The initial risks of crypto phishing are clear - lost funds and vulnerability. But there are also risks related to the evolution of the blockchain space. A rise in crypto phishing attacks in the cryptocurrency space ultimately creates an overall perception of security threats and uncertainty in the blockchain ecosystem. This could influence investors’ willingness to enter the space, therefore hindering the mass adoption of blockchain technology and the use of cryptocurrency for different purposes.
Cryptocurrency phishing attacks can differ in nature and execution. Here are some of the most popular crypto phishing scams that it’s worth knowing about.
Spear phishing is very similar to what we discussed earlier when exploring how crypto phishing attacks work. This is a targeted form of scam that is specifically designed for an individual or organization. In the case of spear phishing, the victim has been researched and the hacker holds some information like user name, company name and other data.
The scammer sends a personalized email to the victim with an attached malicious link encouraging them to click on it and perform a certain activity. For instance, the message could be requiring the user to update their seed phrase or password. To establish trust, the hacker will most likely present themselves as a crypto wallet provider or another legitimate body. If the victim fails to recognize the red signs and continues to perform the task, their login details will be compromised, making them an open book to the hacker.
This type of crypto phishing attack is perhaps one of the most complex and unrecognizable scams in the blockchain space. DNS hijacking or Domain Name System hijacking involves the hijacking of authentic websites with the purpose of designing a fake interface by altering the DNS entries of the original website. The ultimate goal is to collect login credentials and private keys submitted to duplicate and illegitimate websites. Ultimately, the crypto assets are compromised and user funds are easily stolen.
In addition, the attack can also be performed by running malware on users’ devices, taking over routers, and DNS communication interference.
Mainly performed to get access to users’ seed phrases, phishing bots are computer programs designed to launch automated phishing attacks. They can act just like a human hacker to send phishing messages, create fake websites via DNS hijacking, host sites on servers and more. Usually combined with other forms of crypto attacks, phishing bots can quickly and easily gather victims' login details and personal data.
Fake browser extension scams take advantage of users’ reliance on plugins and involve the creation of fake extensions that are nearly identical to the originals. These extensions are most often promoted via phishing emails or fake websites. They can be used to infect devices with malware, display malicious ads and encourage users to visit fake websites. They're often challenging to remove once installed and are utilized to extract private user information like private keys, mnemonic phrases and others.
Whaling phishing scams are most common in organizations and involve attacking a high-profile individual that is usually higher up the business ladder, like CEOs. It’s a type of spear phishing attack that stands out with a much wider reach as the victim usually has access to much more valuable information, like an entire company network.
Another form of tricking a victim into providing personal data is via ice phishing - a crypto phishing attack where victims are sent false transactions from a legitimate body, organization or source. To access the sent funds, the victim is required to sign in using their private key. Instead of receiving crypto tokens, the victim is misled to approve a transaction, which gives authority over their tokens to the attacker. In other words, the ultimate goal of an ice phishing attack is for the victim to transfer token ownership to the hacker.
Preventing crypto phishing attacks is directly linked to understanding the different types of phishing scams and detecting suspicious signs before acting. The preventative measures differ from one crypto phishing scam to another, but there are a few standard approaches that could be taken to minimize vulnerabilities and protect your crypto assets.
As the blockchain ecosystem evolves and cryptocurrencies become more popular and widely used, it’s completely natural to observe a rise in crypto phishing attacks. To protect yourself and maintain control over your data and crypto assets, it’s essential to be sharp-eyed and well-informed. It's vital that you remain alert at all times and pay attention to the details when receiving emails, links, text messages, or imagery on your devices. By understanding how some of the most popular crypto phishing attacks today work, you can be one step ahead and detect malicious behavior before it’s too late.
