Two teenagers from Hamilton, Canada, were arrested and charged with theft and possession of criminally obtained property after $4.2 million in Bitcoin and Ethereum was traced back to them. The boys, both seventeen years old, defrauded a US investor by pretending to be Coinbase customer support.
They conducted a spear-phishing attack, a targeted form of phishing, where they posed as a trusted source to extract information for their financial gain. The FBI and the United States Secret Service Electronic Crimes Task Force got involved in the investigation. The teens had as much as $13.4 million in cryptocurrency, suggesting it wasn’t their first successful scam.
With the increasing adoption of cryptocurrencies, more people are handling them without proper security precautions, leading to monthly incidents of multimillion-dollar crypto thefts. To combat this, authorities have launched initiatives such as the FBI’s Virtual Asset Exploitation Unit and the task force in Arizona dedicated to investigating crypto and darknet crimes, involving Homeland Security Investigations (HSI) Arizona, the Internal Revenue Service Criminal Investigation, the Office for US Attorneys, the Postal Inspection Service, and the Drug Enforcement Administration.
The year 2022 witnessed a significant increase in cryptocurrency phishing attacks. Kaspersky, a Russian cybersecurity and antivirus provider, reported a significant rise in cryptocurrency phishing attacks. The number of attacks increased from 3,596,437 in 2021 to 5,040,520, marking a 40% year-on-year increase. This indicates a shift in focus by malicious actors from traditional financial threats to targeting cryptocurrency investors through phishing.
The rise of decentralized finance (DeFi) has also led to an increase in hacking attempts. Drofa’s research on DeFi security in 2022 revealed a surge in DeFi hacking incidents. Whether this trend will continue in 2023 remains to be seen.
On the other hand, the United States Securities and Exchange Commission (SEC) has issued a Wells Notice to Coinbase, indicating its preliminary determination to recommend an enforcement action against the crypto exchange. These allegations are expected to focus on potential violations of federal securities laws related to Coinbase’s main trading platform and other services. Coinbase has publicly acknowledged the notice and expressed confidence in the legitimacy of its services while welcoming a legal process.
As the adoption of cryptocurrencies and DeFi platforms continues to grow, the risks associated with cyber threats also increase. Educating oneself about these risks and implementing robust security measures are essential for safeguarding investments and maintaining the integrity of the crypto space.