Karpersky Lab’s second quarter spam and phishing report for 2018 stands as a stark reminder of the need for vigilance when investing in ICOs. Findings revealed that 2.33 million USD had been stolen by cybercriminals using fake Initial Coin Offerings (ICOs), the majority of which consisted of Ethereum ICO scams. The platform also proved to be the most popular cryptocurrency for phishing scammers to exploit.
The report’s cryptocurrency section opens with the assertion that Kapersky’s anti-phishing system had prevented 58,000 of its users from connecting to websites posing as popular crypto wallets and exchanges; a statistic which illuminates the sheer scale of the security issues facing the fledgling industry.
It seems that the vast array of new projects and ICOs being developed on the Ethereum network has made it a fertile hunting ground for nefarious players. Scammers are using evermore ingenious ways to dupe potential investors. The first method mentioned in the report is “classic phishing”, “which aims at gaining access to victim’s accounts and private key information” and, rather worryingly, the amounts stolen in this type of scam are not included in Karpersky’s final total. The 2.33 million USD stated only refers to the funds stolen using scams which target specific ICOs.
One of the main ruses deployed by cyber-thieves is phony coin giveaways for real tokens or, as yet unreleased, ICOs. Keen investors are convinced by official looking emails to send funds to unknown wallets in the hope that it will grant them early access to new coins. Scammers have become so adept at impersonating genuine blockchain enterprises that sometimes, “phishing sites pop up before official project sites.”
Ethereum ICO scams have afflicted several well-known ventures in recent memory. Most notably, the video call app, Experty, was used as a front to trick potential investors out of 150,000 USD’s worth of Ethereum in January. The instant messaging app, Telegram, suffered a similar fate when, in the first few months of 2018, dozens of fake ICO sites appeared and reportedly pilfered sums comparable to the amount raised by the official ICO itself. Couple these incidents with Coindesk’s damning revelation in July that the majority of ICOs themselves are fraudulent in nature and it’s clear that, Houston, we have a problem and we may even need a bigger boat as well…
There’s a tired cliche that equates cryptocurrencies to the Wild West and the lawless days of the Gold Rush. It’s a scary story told to discourage mainstream consumers from getting involved in ICOs and crypto trading. The part of the analogy that often gets left out though, is the part where the American Wild West gives rise to the world’s most powerful nation. Ethereum ICO scams are a symptom of the platform’s success and scammers flock to it because they can smell money.
There’s tonnes of great projects doing some very special things in the crypto-Wild West right now, just remember, until the Sheriff gets here, you need to have eyes in the back of your head!
When you’re ready to saddle up, mosey on over to our guide to finding the right ICO investment for you.