Fraudulent “Liquidity Mining” Crypto Scam Preys Successfully On Investors May 2022

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Fraudulent “Liquidity Mining” Crypto Scam Preys Successfully On Investors May 2022

A cybersecurity firm has tracked a new crypto scam that targets new investors.

Known as “liquidity mining,” this scheme takes advantage of the complexity of crypto-trading to commit heists.

Scams and hacks abound in the cryptocurrency space.

Crypto scams cost Americans an estimated 750 million dollars last year, according to the Washington Post.

According to the FBI, this huge sum is almost twice the value of physical robberies.

Misled crypto victims often turn over their funds voluntarily only to realize later they’ve been duped – crypto scams are typically built on lies, while physical robberies are thought of as confrontations.

TechRadar wrote that for a decentralized currency to trade, “there needs to be a pool of liquidity”.

To create a pool of liquidity, legitimate cryptocurrency administrators will ask investors to lend some of their tokens to the pool in exchange for a small recurring bonus – this is achieved via a coded digital agreement called a “smart contract.”

Scammers are developing fake cryptocurrencies and falsifying records to make them appear as rising in value.

Then they target new investors to connect their digital wallet, sign a smart contract and make contributions to the liquidity pool – a pool which, of course, does not actually exist.

Business Trends Graphs and charts 3d image
The new scheme is called “liquidity mining.”

Reports show that some perpetrators recruited victims using the catfishing angle – an attractive woman sends an unsolicited direct message with a link to a moneymaking opportunity too good to be true.

A victim of a liquidity mining theft told the Global Anti-Scam Organization “Activating the link will establish a smart contract with the scammer and the user may not know it.”

“Victims will not be fully informed what the smart contract they just entered truly does,” they added. “Once the smart contract is activated the scammer can steal the USDT any time they want.”

Scammers launder the money through other cryptowallets, exchanges and disappear into cyberspace.

The liquidity mining scam is an elusive one – The Post notes that as much as $66million could have been stolen in scams modeled after it.

A Reddit page, called r/eth_liquidity_scam, has scores of posts for crypto-enthusiasts to flag and discuss recent tweaks to the scam.

This article originally appeared on The Sun and was reproduced here with permission.

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