Cybercriminals and fraudsters are pushing the DeFi craze to deceive the public with hard-earned cryptocurrency tokens, experts warn.
Cybersecurity researchers at Sophos have uncovered an ongoing campaign to hunt down the less knowledgeable about a new crypto space called decentralized finance (DeFi) and are slowly draining their funds until nothing is left.
Sophos calls the new campaigns “liquidity mining scams” and suggests that anyone involved in crypto trading should be careful to make that sound come true.
Earn millions, lose thousands?
The rise of the blockchain has given birth to so-called “smart contracts” – especially pieces of code that act as an intermediary and allow both parties to engage in a value transaction without the need for an intermediary.
With the help of smart contracts, pink decentralized finance – an umbrella term that usually covers many services offered by centralized firms (trading, lending, etc.). When it comes to trading cryptocurrencies in a decentralized environment, there should be a liquidity pool for the exchange of two currencies.
Customers are encouraged to provide this liquidity (especially to give away their coins) by accepting a certain percentage of the trading fees associated with the specific DeFi protocol, among other things. To do so, they often need to connect their crypto wallets (for example, MetaMask) with the DeFi protocol.
And here scammers jump. Sophos says they create fake apps, fake protocols or fake tokens and reach potential targets through social media using fake identities. After a little innocent chat, they persuade and persuade the victim to provide liquidity for a specific pair of cryptocurrencies that appear to promise great returns.
They also create fake reports to further convince the victim about great earnings and in some cases, they even allow advance withdrawals. However, they encourage the victim to pursue a larger investment, in order to earn more. In fact, the target victims are being drained until nothing is left.
After taking aim at everything they have, the attackers disappear into the air.