Liquidity mining scams leverage the complexity of decentralized finance (DeFi) cryptocurrency trading applications, such as decentralized exchanges (DEXs) and Automated Market Makers (AMMs), to confuse and defraud.
A follow-up to this report will cover additional scams we have uncovered related to this case, as well as other similar scams and their technical details. In this report, I’ll focus on the specific details of this victim’s case. Cryptocurrency stolen by these scammers is rarely recovered. Fraudulent wallets and domains are identified and blacklisted as they are discovered, but scammers can quickly deploy new websites and wallets and continue to filch targets’ “risk-free” stakes.
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As a result, it is extremely difficult to prevent these scams through software protection. These scams require no malware on the target’s device, and no “hacking” of any sort other than fraudulent websites and social engineering-convincing targets to connect their wallet to an Ethereum smart contract that gives the scammers permission to empty the wallet. I have also identified hundreds of other scam sites that follow the same formula, netting millions in stolen crypto. These sites, over a period of five months, pulled $1.08 million worth of cryptocurrency from victim’s wallets, with a peak of activity in June through August that netted 86 percent of that total. Tracking wallet addresses and the web address of the scam pool, I was able to track the wider scam, identify related infrastructure, and uncover additional scam sites using the same “kit.” I found 13 additional domains hosting the same fake decentralized finance app, which targeted users of Trust Wallet.
The scammers also used generative AI to create messages sent to re-establish a connection with the target. Scammers have continued to harass the victim after stealing his cryptocurrency, holding out the hope that he could recover his funds by depositing even more cryptocurrency into the scheme even after he blocked the scammer on WhatsApp, they continued to try to contact him through additional channels tied to his mobile number and e-mail. As with other forms of sha zhu pan scams we’ve seen recently, the victim was initially lured into a flirtatious correspondence with the actors hiding behind a dating app profile-in this case, on the app MeetMe. But one variant has been growing at a particularly rapid pace: fake “liquidity mining.” Sophos X-Ops has also seen growth in crypto phishing sites that connect to cryptocurrency wallets while impersonating cryptotrading-related brands in other types of scams, but these sites are often used by sha zhu pan scammers to separate victims from their money.Īmid research into a new wave of liquidity mining scams, I was directly contacted by a victim in the US who shared the entirety of their experience with us after losing $22,000 USD to a liquidity mining scam.
Crypto fraud has become the dominant form of Internet-based confidence schemes over the past three years, as demonstrated by the sha zhu pan (“pig butchering”) scams we recently investigated.
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