It should be noted that sometimes scammers also act in blatantly old fashioned ways. For example, yesterday they hacked the YouTube channel of a famous blogger called Linus Tech Tips, which has over 4 million subscribers. They then changed the channel’s name to “Tesla” and launched a fake stream allegedly featuring Elon Musk, Twitter co-founder Jack Dorsey and Ark Invest executive Katie Wood.

On the stream, the stars allegedly discussed Bitcoin, well the QR code and URL in the description of the stream offered to go to a certain site and “double” their cryptocurrency. To do so, they had to send coins to the specified address. Naturally, no one sent anything in response.

This scheme has existed for a very long time, but it still works. In it, scammers try to play on the greed of newcomers who are unfamiliar with this approach.

How do scammers steal cryptocurrencies?

According to Jardine, the overall revenue from cryptocurrency fraud has dropped significantly in 2022. However, attackers have begun to behave differently. Here is the expert’s rejoinder, in which he shares details of the situation.

One of the innovations in this year’s report was the division of fraud into types. And here we discovered that not all fraudsters behaved in the same way in a bearish trend.

According to Cointelegraph’s sources, the scammers’ emphasis was on investors’ greed for “free” cryptocurrency giveaways, as well as romance scams. Here’s another comment from Jardine on the subject.

It suggests that scammers will adapt over time. Market conditions make investment scams marginally profitable. Perhaps they are replacing their tactics with other schemes that play on the victims’ other emotional sensibilities.

That is, as soon as the usual types of scams stop making enough money, the perpetrators switch to romantic scams. The scheme is based on social engineering: the scammer rubs in the victim’s trust, often by giving romantic overtones to the relationship. The next steps can be different – either trivial requests to borrow crypto, or persuasion to click on malicious links, and so on. Be that as it may, if the potential victim is not careful enough or proves to be too trusting, they could lose money. Which means if a “couple” from Tinder suddenly start talking about cryptocurrencies and investment prospects, it’s worth being as careful as possible.

The cybersecurity expert also noted that in 2022, of the $5.9 billion in fraud losses, schemes with multi-level marketing took a huge share. Among the biggest scam projects that year, Hyperverse, a fraudulent startup, took the top spot. It brought its creators about $1.3 billion.

In the history of the crypto market, the most famous fraud schemes with a tiered structure of "clients" were Bitconnect and OneCoin. Recently it became known that the founder of OneCoin, Ruja Ignatova, who has been on the international wanted list for years, was in fact murdered a long time ago.

We can also think of so-called situational schemes: this is when fraudsters use a topical event in the cryptocurrency world to promote their scam. For example, in the first half of March, the USDC staplecoin was pegged off the dollar amid the Silicon Valley bank collapse. What did the scammers do?

They launched tweets from company representatives apologising for the situation. As a result, USDC holders were even offered certain bonuses that were actually attempts to steal the coins.

Specifically, on Wednesday, scammers hacked into the Twitter account of Circle’s director of strategy and global policy manager Dante Disparte. In published tweets, Dante apologised for recent events and PRed a fake loyalty programme for USDC holders. Naturally, one should not mess with it as it is fraught with the risk of losing money.

However, fraudulent schemes are not the only way to lose cryptocurrencies. At least a billion dollars in Etherium is forever lost due to human errors or bugs. This statement was made the day before by Coinbase’s director of strategy and business operations, Conor Grogan. He posted a Twitter thread with his own investigation into how many ETH tokens are now permanently out of circulation.

How cryptocurrencies are losing

According to The Block’s sources, around 636,000 ETH will never again be involved in transactions. At the current exchange rate of the cryptocurrency, that’s about $1.12 billion. Here’s the first comment from Grogan’s track on this.

I’ve categorised thousands of cases of typos, user errors and bugs in the Etherium smart contracts. So far, I’ve found 636 thousand ETH worth over $1.12 billion lost forever. We are talking about 0.5 percent of all tokens in circulation. Sometimes crypto is complicated. On the other hand, it’s a large amount of ETH that can no longer be sold.

Most of the 514,000 ETH tokens have been permanently frozen due to a bug in the Parity wallet. Recall that in November 2017, the project team publicly announced the discovery of a bug in the code that allows users to become owners of other people’s cryptocurrencies. Someone took advantage of the vulnerability and blocked a wallet with more than 514 thousand ETH in its account.

The second-largest blocked Etherium is the now-closed Quadriga trading platform. The collapse of the exchange was preceded by the mysterious death of its founder Gerald Cotten. It later emerged that Quadriga may actually have been a major fraudulent scheme.

At least 24,000 ETH had been sent by users of the cryptocurrency to burning addresses, from which the coins could not be withdrawn.

Grogan left another important note in the track.

To be clear, this figure of more than $1.1 billion is significantly lower than the actual number of lost or inaccessible ETH, as it only covers cases where Ether is permanently blocked. For example, this does not include lost private keys or things like Genesis wallets that have supposedly been forgotten.

Incidents like this cannot be traced back to the blockchain – they only surface in particularly interesting stories of early investors who lose a cryptocurrency wallet carrier worth millions of dollars.

We believe that users need to be more proactive about the security of their own digital assets. The best way to do this is to use hardware wallets, which are also suitable for storing large amounts of coins. And it is better to keep the assets used for trading on exchanges.