Lodge Letter #32: Of Hacks, Rugs & Scams
In which we consider the hierarchy of theft into crypto. Plus: Elk protocol and partnership news in advance of ElkNet v.2
Greetings Elks,
The biggest news story in crypto this past week (with apologies to the Canadian truckers) involved the theft of $1.7 million worth of NFTs from OpenSea, the largest NFT marketplace. Perhaps the most interesting detail about the most recent heist is that it didn’t involve a hack or protocol exploit; rather, it appears to have been a fairly basic phishing scam. The bad actors sent out fake emails from OpenSea with links that prompted recipients to authorize transfers on their account wallets.
Of the three types of theft that take place in crypto — let’s call them hacks, rugs, and scams for short — the latter tends to generate the fewest headlines. In part, the lack of attention paid to scams is due to the fact that the victims are usually single individuals, and the stolen funds thus typically number in the thousands of dollars rather than millions. But also, let’s be honest– scams lack the mystique of hacks and rugs.
Hacking conjures images of Mr. Robot frantically scanning terminal prompts in a black hoodie (even if the real thing is decidedly less slick). Meanwhile, rugs–a flexible term for devs absconding with funds deposited in their protocol–have almost become a rite-of-passage within certain swaths of the DeFi community.
Scams by comparison are crude, low-class affairs–the domain of pickpockets and petty thieves. Perhaps for this reason, they also tend to elicit little sympathy for the victims, who are viewed as naïve for taking the bait.
On sum, however, scams are far more pervasive than hacks or rugs. If you’ve ever asked for help in our Elk Telegram or Discord chats, you’ve almost certainly received an unsolicited private message from someone pretending to be one of our community moderators offering to “help.” The most basic impersonation scam involves simply asking the user to transfer funds. More elaborate variations, however, can involve fake emails, web links, or even entire Telegram community chats.
Most of the time, the ruse seems obvious. But as we saw with this week’s OpenSea incident, it’s only obvious if you catch it. The fact that the victims almost always say they never thought it could happen to them underscores the fallacy of thinking that these types of scams only affect unsuspecting rubes.
Just this past week, an Elk community member fell victim to an impersonation scam and lost a good chunk of their holdings as a result. As you head into this week, find some time to check in with your account hygiene. Maybe pull the trigger on that hardware wallet you’ve been putting off (hardware wallets = flossing in this hygiene analogy).
There are other easy steps to make your account more secure, but one of the best is also the easiest: spread your funds around between multiple wallets. This won’t protect you from getting fleeced, but it will limit the damage if any one of your accounts gets compromised. It’s simple and takes less than 5 minutes to set up a new wallet.
And finally, remember, moderators from Elk or any other platform will not DM you first!
ElkNet passed 200,000 total transfers this week! In case you missed it, to celebrate this major milestone, we’re running a Twitter contest with ELK and NFTs as prizes. Check out this tweet, and give us your most heartfelt response to the question: “Why Elk?”
As we wait for ElkNet v.2, new UI, and the other launches that are all still slated for Q1, we continue to highlight partnerships with the most interesting projects across all chains. Over on BSC, We teamed up with Metacosmix, makers of the MetaBeastZ trading card game and multi-chain metaverse. On Avalanche, we announced a partnership with Teddy Cash, a borrowing protocol with interest-free loans and their own stablecoin.
In community news, we sat down with DeFi Slate to talk Elk live from ETHDenver (Hm, why would Elk participate in an Ethereum event…🤔).
Have a great week!
