Biggest Bitcoin Scams to Watch for in 2020
Sadly Bitcoin scams are nothing new. Anytime you have an emerging technology meeting with uneducated and excited investors, there will always be some nefarious party looking to make a quick buck, more accurately, a quick Satoshi. So far, 2020 has not proven any different with multiple major Bitcoin scams rocking the industry.
According to the most recent Whale Alert report, scammers have been able to steal over $24million in Bitcoin during the first half of this year alone. Part of the reason these hackers have been so successful is an increase in online activity. More people than ever are online due to the restrictions put in place during this pandemic.
Protect Your Bitcoin
As more people than ever now depend on the internet for their most basic survival needs, the digital economy is experiencing record growth. Along with this growth comes a bit of confusion. New investors know they want to participate in the crypto market but are unaware of how to secure their holding properly.
Nobody deserves to lose their hard-earned cryptocurrency, especially to some faceless cyber thugs. To protect your savings, it’s imperative to study up on these schemes. In this way, you can recognize these tactics when a fraudster presents them to you. Here are the top Bitcoin scams of 2020 so far:
Hardware Wallet Scams
If you are new to the crypto sector, you are probably unsure of the variations between a hardware wallet and mobile options. Simply put, hardware wallets are devices that allow you to store your cryptocurrency offline, also known as in cold storage. This is by far the most secure way to protect your Bitcoin because it eliminates hackers’ ability to access your holdings.
The downside of hardware wallets is that they can be expensive. Consequently, most hardware wallet owners have saved up enough Bitcoin that they are now ready to HODL (hold on for dear life) their earnings until a later date. Unfortunately, this information is also common knowledge to Bitcoin thieves.
How the Hardware Wallet Scam Works
The hardware wallet scam is pretty straight forward. It begins with someone attempting to save a couple of bucks and find a used or discounted hardware wallet. In many of the cases that have already transpired, the user purchased their wallet from eBay. The eBay seller specifically states that the wallet is new and unopened.
This statement leaves new investors to believe that their product is valid and untampered. However, this isn’t the case. The victims don’t know that the scammers have already examined the hardware wallet and made a note of its backup key phrase. The scammers would then place a fake scratch-off card in the package with the seed phrase on it.
The user receives the new hardware wallet, fully packaged. As you would imagine, they probably inspect the item when they open it and notice nothing strange. Then they begin to set up the hardware wallet using the altered backup phrase card. Since they would see the card was not scratched off, it would make sense to scratch the card and add the phrase as your backup.
The problem is that once a user added this backup phrase and loaded their wallet, scammers would then restore the wallet using the backup phrase to their location. Once they gained access to the wallet, they could then send the funds to any wallet of their choice. Sadly, this scam saw one man lose his entire life savings.
The 2020 Twitter scam
By far, the biggest Bitcoin scam of 2020 has been the Twitter scandal that just unfolded last month. On July 15, 2020, the crypto sector witnessed one of the most high profile Bitcoin scams to date. In the attack, hackers utilized a combination of phishing tactics and social media engineering to gain access to Twitter’s back end. This access gave the hackers “God Mode,” as it’s commonly referred to by staff members.
After penetrating the security of the platform, hackers then infiltrated numerous high-profile Twitter accounts. Next, they began to post fraudulent tweets in which they employed fans of the accounts to send Bitcoin donations. The Tweets stated that the account holder would double all donations received.
Unfortunately, since the accounts compromised featured some of the most recognizable brands and wealthiest people globally, many users believed this was some sort of act of goodwill on their part. Some of the hacked accounts included:
Coinbase, CoinDesk, Binance, Elon Musk, Barack Obama, Joe Biden, Bill Gates, Jeff Bezos, MrBeast, Michael Bloomberg, Warren Buffett, Floyd Mayweather Jr., Kim Kardashian, Kanye West, Apple, Uber, Cash App
Didn’t Take Much
In total, 130 high profile accounts were compromised. In Twitter terms, a high profile account is an account with more than 1 million followers. Out of the 130 accounts that were hacked, only 45 were used to send the Tweet. Not surprisingly, there was an outpouring of individuals ready to donate to the cause. In less than 20minutes, the hackers received 320 transactions that equaled over $110,000.
Unlike most Bitcoin schemes, the Twitter attack was so egregious that authorities had no choice but to track these individuals down. This month, they announced the arrest and charges of three individuals. The individuals included a 19-year-old from the United Kingdom and Floridians – a 22-year-old and a minor.
All three face charges in the United States District Court for the Northern District of California. Given that the Tweets specifically used the pandemic to pull on donators’ heartstrings, it’s unlikely much mercy will be shown to these individuals.
2020 Bitcoin Scams Continue
2020 has indeed seen some large and high profile hacks already. However, it’s also important to remember that the crypto market as a whole is beginning its long march towards large scale adoption. This journey is sure to be fraught with unseen scammers, hacks, and other questionable individuals seeking to get their hands on your Bitcoin. Stay vigilant, and never forget. In the world of Bitcoin, there are no refunds or chargebacks.