Despite the belief of many crypto enthusiasts that centralized exchanges (CEX) are more secure, history often shows them to be rather secure. vulnerable to attack.
These exchanges centralize the custody of user assets, which can make them attractive targets for cybercriminals. Inadequate or successful breaches of exchange security measures may result in theft or loss of user assets.
Another risk of centralized exchanges is fraud or mismanagement by their operator. Because CEX may have a single point of control, it may be susceptible to insider fraud and other forms of fraud, leading to loss of funds and other adverse consequences for users.
With the collapse of major centralized cryptocurrency platforms such as FTX and Celsius last year, more and more users are choosing to self-manage their digital assets. Due to the risky financial practices and alleged fraud on some of these platforms, many people have lost their trust as a safe place to store their cryptocurrencies.
Self-custody refers to holding and managing virtual currency by yourself instead of entrusting it to a third party such as an exchange. This approach gives users more control over their assets and potentially offers a higher level of security. However, it also comes with its own risks, especially in the form of fraud.
Types of scams and how to avoid them
To better understand the potential dangers associated with self-management and provide guidance on how to protect yourself from fraud, Cointelegraph is a multi-chain community platform for reporting fraudulent crypto transactions. I reached out to Alice Boucher of Chainabuse.
One of the scams aimed at taking advantage of crypto users is called “slaughter of pigs”.
“Pig slaughter scams occur when scammers are in constant contact with their victims to build a relationship, lovingly ‘fattening’ them over time and making them invest in fake projects. said Boucher, adding:
“Scammers try to siphon off as much money as possible from their victims. We try to get more money out of people.”
Social engineering uses psychological manipulation tactics to exploit humans’ natural tendencies of trust and curiosity.
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Cybercriminals in the cryptocurrency industry often seek to steal their assets by hijacking high-profile accounts. “From May to August 2022, social media account takeovers involving Twitter, Discord, and Telegram wreaked havoc. Scammers posted malicious NFT phishing links during these attacks, It compromises high-profile social media accounts,” said Boucher.
Once these attackers gain access to a well-known account, they typically use it to send phishing messages and other types of malicious communications to a large number of people, stealing their private keys, login credentials, etc. I’m trying to get you to provide Confidential information.
The ultimate goal is to access self-custody assets and steal cryptocurrencies held by individuals.
Followers of these high-profile accounts can be tricked into clicking malicious links that transfer all tokens from their wallets. These scams may also be designed to get users to invest in the trading platform, often resulting in victims losing their deposits with no way to get them back.
“The amount of fraud, hacking, extortion and other fraudulent activities has increased exponentially over the last few years. Most fake platforms are either Ponzi schemes or payout scams characterized by: It will: Advertise fake returns, have a referral incentive similar to a pyramid scheme, or impersonate an existing legitimate trading platform.
Scammers using these phishing tactics can trick users into signing smart contracts that exfiltrate their assets without their consent. A smart contract is a self-executing contract in which the terms and conditions between a buyer and a seller are written directly into code.
If the contract contains errors or is designed to take advantage of people, users can lose their tokens. For example, if the creator owned and allowed the token to be sold, users could lose their cryptocurrency by signing it.
In most cases, users don’t realize they’ve lost their tokens until it’s too late.
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Self-control is a great way to manage your assets, but it’s important to understand the risks and take steps to protect yourself from bad actors.
To protect yourself when using a self-custody wallet, it’s important to keep your software up to date and follow best practices such as using unique passwords. It’s also important to use a hardware wallet like Ledger or Trezor to store your cryptocurrencies. A hardware wallet is a physical device that stores private keys offline. This means that hackers also need physical access to engage in certain interactions with the blockchain, making it less susceptible to hacking.
