In 2020, this guy Peter treated his crypto like a clingy koala. The world would end by noon, and he’d still be contemplating whether to HODL with his head in a bucket of ice water. To him, enduring the financial torture during the pandemic was more appealing than parting ways with his beloved stash.
Long story short, he ignored that popular meme warning of being DMed about free crypto airdrops by hot girls in Bikini. Peter’s stash of ‘koala’ was among the $516 million lost to cryptocurrency scams in that fateful year. This figure doubled in 2021 when the total losses hit $1B.
In this article, we take a look at a type of scam that’s growing in popularity in 2023 and will be as popular in 2024, crypto-airdrop scams. Officially sponsored by ‘don’t be like Peter’.
Read More: AI Hunts Down 95K ‘Free Giveaway’ Scams on Twitter
What are Airdrops?
An airdrop is a crypto marketing strategy where new blockchain projects distribute tokens for free to their communities. The primary goal of an airdrop is driving enthusiasm and adoption around a new project. Don’t confuse free crypto raining down your wallet for a glitch in the matrix. However, it might be one if the airdrop happens to be something else than what you expect; a scam perhaps. Besides, free money does not rain down from grey clouds.
The Rise of Airdrop Scams
Peter lost his 2020 crypto stash after claiming airdropped tokens from an intrusive smart contract. Intrusive airdrops are a common scam in the blockchain space, however its easy to protect yourself. In the next section, we will explore how scammers take advantage of crypto airdrop schemes to steal from unsuspecting crypto hodlers.
It turns out that claiming airdrops nowadays has become like inviting a blood-sucking vampire to your home. Well, not all freebies come with a silver lining, some bring regret and leave behind a trail of sinking portfolios.
Common Types of Airdrop Scams
Identifying scams requires one to know and understand the types of fraud that exist. The following discussion explores common scam tactics employed by crypto airdrop fraudsters. Remember security in crypto begins with you.
Fake Airdrop Websites
3 months ago, again, Peter bought $2000 worth of Wallstreet Memes Coins in the presale stage. He went on to join the project’s Telegram and Discord communities, when the project launched, he received his holdings but left them to stay on his metamask wallet. One day he woke up to a message on his Discord to click an airdrop link and the team would multiply his holdings. This being the project’s official discord, Peter clicked the link and a smart contract drained all the funds from his wallet.
Apparently, a group of hackers launched a coordinated attack against the Wall Street Memes Discord and took over its control. Thereby persuading the community members to click an intrusive link with the promise of free WSM coins. While WSM compensated everyone who had lost their money, it still remains a lesson about the dangers of airdrops.
How Scammers Create Deceptive Websites in Cryptocurrency Fraud
The above airdrop scam is not the first to target the Wallstreet Memes Coin project, below is an actual case of how a fake project website might look. While the fake one is not necessarily an airdrop website, the means by which it drives people to click their fake URL is by promising them free cryptocurrencies. As such, when they click the scammer’s links, they either lose their funds or compromise their wallets after connecting to the fake website. You need eagle focus to spot fake websites, and this way you will learn the art of avoiding scams.
There are other fake airdrop websites that are not necessarily a duplicate of any particular website. A scammer strategizes what looks like a great project, builds community pages, a Twitter profile and an official website. Using these, the scammer poses as an experienced team of founders, promises generous rewards for investing in them, and mostly the airdrops are usually an irresistible offer. Fortunately for us, these websites appear like a bad joke, outdated and straight from the dial-up era.
Safety Tips: Red Flags to Look Out For
- Too good to be true offers: A deal too good to believe could be a scam. Be sceptical when a project promises unbelievably high rewards for small tasks.
- Unrealistic prerequisites such as the need to submit passwords, private keys or when the signup process seems complex.
- Poorly designed website: Scammers are not 100% sure their work will generate any results, so they create a multitude of spammy sites to trick as many victims as possible. As such, airdrop scammers might not pay attention to top-notch website design. Spot low-quality graphics, unprofessional appearance and fonts.
- Funny URLs: The URL of the fake website above had a .live domain. The name itself was sort of unusual. Check out the URL of every crypto website you transact on before using them. A Pancakeswap fake website ended up stealing from unsuspecting users in 2019.
- Fake team members: Easily verify the team members using their Linkedin pages to ascertain they are real and that they have an affiliation with the project. Some scammers may impersonate real experienced people and use their photographs to scam unsuspecting crypto users. Also, beware of that hot girl in a Bikini bro on your DM! Fake girlfriends are easy to spot when protecting your assets.
Read Also: How to Keep Your Crypto Safe: 8 Tips to Stay Protected
Phishing Emails and Social Engineering
A ‘phisherman’ (or phisherwoman for the feminist crypto bikini girl in the building) uses phishing to extract useful credentials from users. Phishing is a fraudulent method of sending emails purporting to be a reputable firm in order to persuade the recipient to submit important information such as credit card details and passwords.
A rampant unethical behaviour in the crypto scene involves airdrops obtaining sensitive information from users by posing as a legitimate free crypto campaign. Sensitive information could be passwords, private keys, 2Factor authentication details and emails.
Phishing is similar to social engineering. However, social engineering involves manipulating victims using psychological tactics to obtain important credentials or to compel the victims to perform particular actions in the context of cyber security.
Below is a highlight of Phishing attacks and social engineering examples:
- Pretexting;
- Baiting;
- Impersonation;
- Tailgating;
- Reverse social engineering;
- Tech support scams.
Safety Tips: How to Recognize Phishing Attempts
Double check the emails you receive and ascertain it’s the sender’s legitimate email. A phisher’s email may appear legitimate but will have slightly loose variations such as a misspelling, a missing letter or a dot in between the words.
If you receive an email from an organization, verify its source by either contacting the organization via a trusted source. You may also opt to visit their official website and contact the support team through their official phone number. This ensures that the communication is not only official but also ensures you are not the victim of a phishing attempt.
Also, examine the email’s opening greeting. A phishing email will often open with generic greetings such as “Dear User’ or ‘Dear Customer’ instead of using your name to address you. “Dear user, you are about to get w-’hacked’.
Ponzi Schemes Disguised as Airdrops
Why did the cryptocurrency entrepreneur bring a ladder to the airdrop party?
Because he heard it was a Ponzi scheme with “air-mazing’ returns and wanted to make sure he would climb out before the ‘air-mazing’ returns came crashing down.
Ponzi airdrop schemes in the crypto industry involve luring investors to put in their money on a project with the promise of high returns. The returns are even higher if these investors invite more investors within their circle. In reality, ponzies are using funds from early investors to pay new investors, thereby creating an illusion of profitability.
Read more: Metaverse Investments: Making Real Money in an Unreal World
An airdrop scam may use the Ponzi model to compel investors to quickly increase their investment stake before a particular timeup in order to qualify for free airdrop tokens.
How to Avoid Airdrop Scams
Don’t share your private keys or passwords to your wallet or exchange accounts. It turns out that older Americans are the hardest people to scam, according to a study that found that the average American loses $650 every year to a scam. The crypto industry is the easiest financial sector to get scammed. Hence beware of your wallet’s security by keeping your credentials private.
Use Different wallets and emails for airdrops and normal crypto activities. Separate your communication email with your financial accounts email. This will make it difficult for scammers to target you and reduce the chances of getting your wallet “Whack’d’
Verify the HTTPS connection of the website and ascertain that it is secure. A secure HTTPS connection protects your data when visiting websites. In case your browser comes across an intrusive website, the protocol will secure your data.
Conclusion
Navigating the airdrop scam landscape requires the attention of a detective, the scepticism of a conspiracy theorist, and the resilience of someone who’s eaten expired yogurt without flinching.
More Info:
- The Curtain Rises: Unveiling the Top 10 Crypto Frauds of 2023 (So Far)
- Bitcoin Bosses: The Fab 5 Who Rule the Crypto Jungle!
- Atomic Wallet Explores Possible Scenarios Leading to Recent Security Incident: Unveiling the Cryptic Causes
Stay alert, keep your crypto close, and remember, not every airdrop is a pot of gold at the end of the rainbow – sometimes, it’s just a cleverly disguised leprechaun trying to take your hard-earned gold coins. Happy scam-busting! “Whack a scam today without flinching’.
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice of this sort, HODL FM strongly recommends contacting a qualified industry professional.
