July 28, 2022
“Hello, I’m a student. I have $7900USDT (trc20) in my cryptocurrency wallet. I don’t know how to change these USDT into dollars. Can you help me? 12 Mnemonic Phrase Tron: Income gossip movel canyon cube muscle first that gloom pyramid scatter fiction password private key: ***”
Are you a twitter maniac and one among those who have received this message recently? If yess! Then here is what you should know…
Ohh noo! I should have rechecked the link before clicking! This could have been your reaction if you had been a victim of an online scam and lost a huge sum of money.
Well, we all like to believe that the Internet is a safe place where you wouldn’t succumb to any form of online fraud, but it’s always a smart option to do a “reality check.” It’s a matter of fact that we all can be easy targets for hostile actors looking to obtain our most precious financial information. And one such scam that has been around for a while is the Cryptocurrency scam. While the most brazen crypto scams make headlines, there are indeed more shakedowns that are more mundane.
Today, many amongst the crowd are concerned about the volatile status of the cryptocurrency market and the influence it will have on the future of trade. According to the Federal Trade Commission’s (FTC) Consumer Sentinel, between October 2020 and March 2022, approximately 9,000 people have reported losses totaling more than $90 million. As ordinary investors, speculators, and all widespread institutional investors continue to devote their attention to the lucrative cryptocurrency markets, so are the scammers!
Crypto scams typically attempt to obtain sensitive information such as security codes or to deceive an unsuspecting individual into sending cryptocurrency to a corrupted digital wallet. Given the exponential surge in reported crypto frauds, understanding the different types of scams and what you can do to protect yourself from being deceived is extremely important.
However, many cryptocurrency amateurs and aficionados are misled into assuming that they are investing in a trustworthy new asset class and it might be difficult for newbies to identify scams initially. Hence, let’s take a look at a cryptocurrency scam that is on the rise recently.
In this digital world, many of us have come to rely on social media platforms such as Facebook, Instagram, and Twitter to remain connected, follow the news, and even make purchases. However, as their popularity grows, so does the possibility of scams as social media has become the gold mine for scammers, especially for cryptocurrency scams.
Having said that, let’s take a look at a recent message that social media users, especially twitter users have been receiving:
So what exactly is this message? At a first glance, the message looks normal. But…. Read it again! On second thought, do you think it is a scam? Yess! Absolutely yes! It is indeed a trap!
But before looking deep into what this scam is all about, let’s take a look at a few important phrases that you should know in detail.
The 12-word or 24-word Mnemonic phrase is the key to your wallet and its contents. It’s a string of 12/24 lowercase words that are produced at random for you when you initially set up your Wallet.
Public key encryption, also known as asymmetric encryption, can be shared to others and employs two distinct keys rather than a single shared key: a public key and a private key.
A private key, also known as a secret key, is a cryptographic variable that is used in conjunction with an algorithm to encrypt and decode data. The private key serves as a password for your cryptocurrency wallet and therefore should be kept private.
When opposed to a well-regulated stock market, the truly decentralized nature of cryptocurrencies is a big attraction for investors as they can operate outside of the regulatory norms that act as the trademark of stock exchanges. However, it is consequential to know how exactly the crypto exchanges work, as you might actually not be aware as to when exactly you may need it.
In general, when a person has cryptocurrency in their wallet (For ex: 7900 USDT), he/she would need a Crypto exchange platform to convert cryptocurrency into fiat currency. Further, for conversion purposes, he/she has to send the cryptocurrency from their wallet to an exchange platform. After receiving the digital currency, the exchange platform helps one to convert it into fiat currency, and then the amount will be transferred to the bank accounts as fiat currency. However, the exchange platform might charge a certain amount or keep some digital currency with them as withdrawal gas or fee for the transaction process.
With cryptocurrency demand skyrocketing, it’s no surprise that “Olympic-level scammers” have taken notice of new nuances for unlawful activities. In the above message (Snapshot), the user has exposed her 12-word mnemonic phrase, which is used to create public and private keys. However, the mnemonic phrase is not required for the crypto exchange process and should not be exposed to anyone under any circumstance. But as opposed to the real exchange process, here the user tries to manipulate people by exposing her 12-word mnemonic phrase and private key.
But the real mystery here is that, as the wallet is based on the TRON blockchain, one must require a TRX (the native token of the TRON network) to pay for the withdrawal gas/fee. However, here the main aim of the scammer is to target those people who would withdraw the funds for themselves.
And how does this benefit the scammer? As soon as a person sends TRX to the wallet, the scammer immediately withdraws their TRX (using an automated script/bot). This indirectly benefits the scammer as she will now receive more TRX from others. And just like that with a small cakehole, the scammer washes out the user’s TRX which leaves the user not being able to dig deeper to try to figure out where exactly their money has gone.
However, you should also be aware that these scams are mostly performed from a multisig wallet. Multisig wallets usually have 2-3 keys out of which the scammer usually reveals only one key. Hence even if you wish to transfer the cryptocurrency to your wallet, you will be unsuccessful as you would need all three keys to complete the transaction and not just one. However, indirectly you will fall victim to the trap while you try to transfer the cryptocurrency to your wallet. Hence the pro tip here is that even if someone exposes/shows you High APY or their wallet’s private key, never trust them as it is obviously a sign of a scam.
In the above scam scenario, the current value of the Scammer’s TRX is approx $271, and the same is continuously increasing as numerous people have and are falling victim to this scam.
As a Blockchain Development Company, what we would like to suggest is that:
For numerous people out there, the frenzied rush into cryptocurrencies has evoked the feelings of the Wild West. As the crypto ecosystem grows in size and complexity, it is more likely to remain a prime target for scammers. Understanding the common methods used by scammers to steal your information (and ultimately your money) will allow you to detect a crypto-related scam early and prevent it from happening to you.
However, if you’ve never heard of cryptocurrency, dig deeper into it. See if there’s a whitepaper or blog on scams that you can read, learn who controls it and how it works, and look for authentic reviews and testimonies. Well, for now, cryptocurrencies have no oversight. However, you can always file a report with the FTC, if you are suspicious about being a target of a crypto scam.
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