Sophos, a global leader in next-generation cybersecurity, published threat research on emerging cybercrime in the article “Liquidity Mining Scams Add Another Layer to Cryptocurrency Crime” today. The article is the first in a series that aims to expose scammers who use the hype surrounding cryptocurrency trading and the vast sums of digital wealth users have made (and lost) in crypto markets to entice and swindle would-be investors.
“Interactions from a single Direct Message on Twitter led to Sophos’ investigation that uncovered several liquidity mining fraud rings. Liquidity mining is a form of cryptocurrency-based investment in DeFi that even when ‘legitimate’ is both dubious and complicated. The strategies behind the investments themselves are complex, and there’s no regulation beyond the ‘smart contract’ code embedded in the DeFi network’s blockchain — code that many people can’t easily interpret even when it’s publicly published. There’s also a shortage of reliable information for new investors on how these networks work. Despite these risks, liquidity mining is the latest cryptocurrency investment craze, but because of these factors it’s also the perfect platform for scammers to leverage. Unfortunately, we expect liquidity mining CryptoCrime to continue; it hasn’t peaked. Hundreds of millions of dollars are at stake,”Sean Gallagher, senior threat researcher at Sophos.
Sophos explains in the investigative article how the complexity of cryptocurrency and decentralized finance (DeFi), the foundations of liquidity mining, create an ideal environment for criminals to easily conceal and carry out their malicious intentions. Scammers are not afraid to target their victims; they actively spam recipients via Direct Messages on Twitter, What’s App, Telegram, and other social networking platforms, innocuously discussing liquidity mining to put targets at ease. Scammers then escalate the scheme.
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