As the cryptocurrency market continues to draw substantial investments, it has also seen a surge in fraudulent activities and scams. Regulatory bodies worldwide, led by the United States, are stepping up their efforts to combat cyber threats, hacks, and frauds that impact the industry.
However, these cyber threats are not limited to the nascent cryptocurrency sector alone. Since 2020, such attacks have become common both within and outside the crypto space.
In this context, the Federal Bureau of Investigation (FBI) has identified a new threat called “The Phantom Menace.” On September 29, the FBI issued a warning about the escalating “Phantom Hacker” scams, especially targeting senior citizens.
FBI Alert: ‘Phantom Hacker’ Scams Targeting Cryptocurrency
The FBI’s statement revealed that the “Phantom Hacker” scam is an evolved version of traditional tech support scams. It involves impersonating tech support, fraudulent exchange account support, and government personas to gain the trust of victims. This multi-faceted approach allows scammers to identify valuable accounts to target.
From January to June 2023, the FBI’s Internet Crime Complaint Center (IC3) received over 19,000 complaints related to tech support and cryptocurrency scams, resulting in estimated losses exceeding $542 million. These losses have already exceeded 2022 figures by 40% as of August 2023.
The Scam Phases:
In the initial phase of the scam, fraudsters pose as tech or customer support representatives from legitimate companies. They contact victims through various means and use persuasive tactics to convince them to call a designated number for assistance.
Once victims make contact, scammers manipulate them into downloading software that grants remote access to their computers. By fabricating a fictitious virus scan, scammers deceive victims into believing their computers are compromised or at risk.
Subsequently, they persuade victims to open their financial accounts, allowing scammers to identify the most lucrative targets.
After successfully gaining access to victims’ financial accounts, scammers move on to the second phase of the scam. In this stage, they assume the role of representatives from reputable financial institutions like banks or brokerage firms.
The scammers falsely inform victims that foreign hackers have compromised their computers and accounts. To safeguard victims’ funds, they instruct victims to transfer their money to a purportedly “secure” third-party account, often claiming an affiliation with recognized entities like the Federal Reserve or other US government agencies.
These transfers typically involve wire transfers, cash, or even cryptocurrencies, with the funds predominantly sent overseas. Scammers pressure victims into maintaining secrecy regarding the true purpose of these transfers.
Rise in Ransomware Attacks
In contrast to the decline in overall cryptocurrency-related crime in 2023, as reported by Chainalysis, there has been a resurgence in ransomware attacks. Cumulative daily inflows to known illicit entities have decreased by 65% compared to the same period in 2022.
Notably, scams have experienced the most significant decline, with scammers generating nearly $3.3 billion less revenue in 2023 than in 2022. However, the report highlights a concerning trend: ransomware attacks.
By June 2023, ransomware attackers extorted $175.8 million more than during the same period in 2022, indicating a reversal from the downward trend observed in 2022.
While overall cryptocurrency-related crime has decreased, the resurgence of ransomware attacks poses a significant threat and could potentially affect the cryptocurrency sector. Even as the number of attacks declines, the amount stolen in the crypto space underscores the importance of users remaining cautious in the face of evolving threats.