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What is Phishing in Crypto and How Can You avoid it?

05 Oct 2022 By : Anirudh
Southeast Asia’s Lar

Key Takeaways 

  • Phishing is a type of social engineering attack used to trick a person into revealing their confidential information (i.e. private keys and wallet addresses) and losing their money.

  • To avoid these frauds, be cautious, don't reveal your personal information, carefully check the URLs and extensions before downloading, and always try alternative ways if something appears suspicious.

Scams in financial assets have a long history, even before the development of blockchain technology and cryptocurrencies. Any emerging industry will attract fraudsters, and crypto is no exception. Rapid development in the field of crypto and blockchain has made its users prime targets.

When it comes to cybersecurity associated with it, phishing schemes are frequently used to fraud users. Phishing, in general, is a type of social engineering attack used to trick a person into revealing their confidential information and losing their money. Let's have a look at how they work in crypto and how to avoid them.

What is a Phishing Attack in crypto?

Phishing is a type of crypto scam in which victims are tricked into giving up their private keys or confidential info. To acquire the victim's trust, the attacker usually disguises himself as a reputable institution or person. After the victim has been duped, the attacker utilizes their personal information to steal their bitcoin funds.

Phishing scams are more common than ever as cybercriminals and attacks on blockchains are getting more sophisticated. Many attacks target wallets, cryptocurrency exchanges, and initial coin offerings (ICOs). As a result, crypto users must be aware of how they operate in order to safeguard themselves and their funds.

How do Phishing Attacks work?

An attacker often begins a phishing attack by sending a bulk email or message to potential victims. It will frequently appear to be from a reputable source, such as a wallet or exchange.

These emails include a link to a bogus website that appears just like the real one. They typically ask the recipient to reset their password or confirm their details, which leads to a fake website that seems identical to the original. These credentials or info are used by an attacker to steal the funds of the victim. 

By appealing to a target's feelings of urgency or fear, phishing attempts compel them to act. A message, for example, may say that there is an issue with the recipient's account and that they must check in quickly to solve it. Others try to attract victims by posing as a reward or giving an airdrop. Some attackers even impersonate concern by informing account owners about suspicious behavior" in order to trick them into entering their login credentials on a fake website.

Phishing attacks are also executed in the cryptocurrency ecosystem. Scammers attempt to steal Bitcoin or other digital assets from consumers. For example, an attacker may mimic a reputable website and change the wallet address to his own, giving consumers the appearance that they are paying for a legitimate service while, in fact, their money has been stolen.

Most commons Phishing Attacks

Spear Phishing 

Spear Phishing attack is similar to basic phishing attacks but involves targeting a specific individual or organization. The attacker first gathers information about the target and then creates a message based on this data with the intention of convincing the victim to visit a malicious website or download a malicious file.

Crypto-jacking

This is the process of mining crypto coins utilizing the resources of your machine. While it is not usually the consequence of a phishing attempt, downloading from unfamiliar sites can sometimes install crypto miners on your machine. It gives another party the ability to benefit from your resources. This may not be detected for a long time.

Phishing Bots

Phishing bots are computer programs that perform phishing attacks automatically. They may be used to send bulk phishing emails, build bogus websites, and host such websites on servers. Such bots might also acquire victims' login passwords and other personal information automatically. These programs are frequently used with other sorts of attacks, such as denial-of-service attacks and spamming.

Pharming

Pharming is a more advanced method for obtaining user credentials by attempting to input people into a website. It simply redirects visitors from one website to another that seems identical in order to steal information.

Even if a victim enters the proper URL, they are sent to a bogus website. This is often accomplished by infecting the DNS server, which is in charge of transforming URLs to IP addresses, with malicious code. When victims attempt to access a real website, the code will redirect them to the attacker's bogus page.

Clone Phishing

This attack occurs when the phisher makes a clone of a valid email that has previously been delivered to the victim. The attacker sends a malicious attachment or link instead of the original attachment or link. Because the email appears to be identical to one that the victim has previously received, they are more likely to click on the link out of habit or familiarity.

Whaling

A whaling attack is a sort of phishing attempt that targets high-profile workers, such as the CEO or CFO, in order to acquire critical information from a corporation. The attacker's purpose in many whale phishing attempts is to trick the victim into authorizing high-value wire transfers to the attacker.

Crypto Malware 

Some attackers may be able to completely control your machine. This is also referred to as ransomware. Hackers might prohibit you from accessing your computer or mobile device by locking you out. This also grants them access to all of your computer's data. The attackers may then threaten to destroy this data or publicly disclose your personal information.

Fake Browser Extensions

Crypto users utilize a variety of browser extensions like MetaMask wallets or other crypto wallets. While the wallet browser extension provides convenience for crypto users, it may also be a tempting target for attackers.

Cybercriminals are stealing cash from consumers by impersonating crypto wallet browser extensions. Fake browser extensions can aid in the theft of login credentials for the user's wallet. 

Ice Phishing

Attackers use ice phishing to trick victims into handing over permission for their tokens. They achieve this by using smart contracts to conceal their intentions. It is a method that does not involve the theft of private keys. Instead, it persuades a user to sign a transaction that grants the attacker access to the user's tokens. An ice phishing attack requires the attacker to simply change the spender's address to the attacker's address.

How to avoid crypto Phishing Attacks?

  • Be cautious: The best defense against phishing is to examine the emails you receive. Check the sender’s email address. See if there is any history of phishing attempts that employed that precise tactic. Don't click on links or download attachments from sources that seem to be suspicious.

  • Don’t share personal information: Never give away private keys or wallet addresses, and be cautious in assessing whether the account to which you are going to transact any cryptocurrency is genuine.

  • Check the URL: Hover over the link without clicking it to see if it begins with HTTPS rather than just HTTP. However, this alone does not guarantee that the site is authentic. Examine URLs for misspellings, odd characters, and other inconsistencies.

  • Try an alternative method: If you believe you have received a valid request to confirm your account credentials for a company you are acquainted with, try a different method rather than clicking the link in the email.

  • Don’t download browser extensions from suspicious sources.

Bottom Line

Cryptocurrencies are gradually expanding beyond the traditional boundaries of financial applications into a wide range of other uses. Precautions against typical phishing attacks will not only protect your funds but will also develop confidence in cryptocurrencies. Users should be seen as part of the security solution, not the security issue. 

 


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