A new crypto scam preying on new investors has been tracked by a cybersecurity firm.
The scheme is called “liquidity mining” and the perpetrators use the complexity of crypto-trading as a shield for heists.
The cryptocurrency space is ripe with scams and hacks.
The Washington Post reported that Americans lost an estimated $750million in crypto scams last year.
This monstrous amount is almost double the value taken in physical robberies, according to the FBI.
Crypto scams are normally built on lies where physical robberies are thought of as confrontations – misled crypto victims often turn over their funds voluntarily only to realize later they’ve been duped.
TechRadar wrote that for a decentralized currency to trade, “there needs to be a pool of liquidity”.
To create a pool of liquidity, legitimate cryptocurrency administrators will ask investors to lend some of their tokens to the pool in exchange for a small recurring bonus – this is achieved via a coded digital agreement called a “smart contract.”
Scammers are developing fake cryptocurrencies and falsifying records to make them appear as rising in value.
Then they target new investors to connect their digital wallet, sign a smart contract and make contributions to the liquidity pool – a pool which, of course, does not actually exist.
Reports show that some perpetrators recruited victims using the catfishing angle – an attractive woman sends an unsolicited direct message with a link to a moneymaking opportunity too good to be true.
A victim of a liquidity mining theft told the Global Anti-Scam Organization “Activating the link will establish a smart contract with the scammer and the user may not know it.”
“Victims will not be fully informed what the smart contract they just entered truly does,” they added. “Once the smart contract is activated the scammer can steal the USDT any time they want.”
Scammers launder the money through other cryptowallets, exchanges and disappear into cyberspace.
The liquidity mining scam is an elusive one – The Post notes that as much as $66million could have been stolen in scams modeled after it.
A Reddit page, called r/eth_liquidity_scam, has scores of posts for crypto-enthusiasts to flag and discuss recent tweaks to the scam.
This article originally appeared on The Sun and was reproduced here with permission.