Addressing Misrepresentation & Fraud in Crypto
At its core, blockchain is a revolutionary technology that envisions a more democratic, transparent, and autonomous world. Instead of Big Tech siphoning billions of dollars in value from its users, users own the data they create. Banks that hold fractional reserves and pay little to account holders can be replaced by decentralized finance protocols, where borrowers and lenders interface directly. Best of all, these operations are governed and executed by code, removing human error from the equation. It all sounds very nice, but this reality is still a long way off. Crypto today has many times been likened to the Wild Wild West, and for good reason. Any and everything goes, and where some have grown their wealth exponentially, others have done very much the opposite. In this article, we’ll dive into an attack vector that has proven extremely lucrative for crypto scammers, misrepresentation, and how CONNECT2CRYPTO looks to address this.
The State of Crypto Scams
- Over the course of 2021, crypto scammers misappropriated approximately $14 billion.
- Approximately 6800 people reported over $80 million in scams to the Federal Trade Commission (FTC) between October 2020 and March 31, 2021. This represents a 12 fold increase in the number of reports, and a 10 fold increase in the value of losses reported.
- Social media platforms have become the primary driver for online scammers, with $770 million in losses reported as a result of social media rackets in 2021. Facebook and Instagram were the leading platforms that scammers use.
- Cryptocurrency related fraud now accounts for a majority of online investment fraud.
- 64% of reported investment scams on social media were cryptocurrency related, compared to the next highest category, instant payment apps linked to bank accounts, which only accounted for 13%.
- One of the primary attack vectors used by scammers was misrepresentation, wherein a scammer will pose as celebrities, friends or family, and encourage certain investment decisions. A common method used is to promise to send more money back, “send 0.1 BTC to this address and you’ll receive 0.5 BTC.”
Notable Scams
- An 18 year old Floridian was arrested for hacking Joe Biden and Bill Gates Twitter accounts. The culprit encouraged people to send money to a given wallet address, which would supposedly result in double the amount being sent back. This accounted for over $100k in losses.
- A similar scam involving Elon Musk’s Twitter account was tied to approximately $2 million in losses.
In the instances above, hackers successfully assumed control of the accounts in question, which made the scam seem more legitimate. However, this is not a prerequisite, and due to the ease of creating accounts on platforms like Telegram, Facebook, Instagram etc., scammers can merely create an account with likeness to a celebrity, friend or family and go about a very similar scam. With a convincing profile picture, display name, and seemingly human conversation, a user can easily be fooled.
Core to the mission of CONNECT2CRYPTO is the creation of a safe, secure platform for crypto content and discourse. One of the ways this will be achieved is through the introduction of a multi-tier, KYC framework.
- 3 tiers of KYC verification available, platform users will be able to see what level of KYC an account has
- Users can set a KYC requirement for accounts looking to interact with them, i.e only accounts with KYC 2 can message me
- Community builders are required to perform a minimum level of KYC verification, helping to ensure that platform users interact with legitimate teams, founders, organizations etc.
- Community builders may set a KYC requirement to join their community
By introducing a multi-tier KYC framework, CONNECT2CRYPTO looks to provide users with flexibility when it comes to sharing personal information, while creating a safe space where users can operate with confidence. This also helps to deter spam accounts and bots, promoting human-to-human interaction.
Stay tuned for the release of our whitepaper and beta launch of the CONNECT2CRYPTO App!
