Coinbase CISO: Social engineering scams top threat to crypto users

by

As a seasoned crypto investor who has experienced the highs and lows of this exciting but volatile market, I can attest to the importance of heeding Jeff Lunglhofer’s warnings about social engineering scams. Having been lured by a seemingly too-good-to-be-true investment opportunity once, I learned the hard way that if it sounds too good to be true, it probably is.

As stated by Jeff Lunglhofer, Coinbase’s top security officer, social engineering schemes pose the most significant risk to individuals who use or store cryptocurrencies at present.

Lunglhofer spoke to crypto.news in an interview about the rise of such scams, which are a threat to both novice and experienced crypto users. 

According to Lunglhofer, social engineering frauds pose the greatest risk to crypto users, owners, and investors currently.

Three ways to avoid social engineering scams 

Lunglhofer emphasized that although these scams are not unique to the crypto sector, their frequency has increased over the past several years. He suggested two primary precautions to avoid crypto scams.

Initially, disregard any unexpected phone calls that claim to originate from well-known cryptocurrency exchanges such as Coinbase or Kraken. If you do receive such a call, promptly end it, navigate to their official websites, and reach out to them via recognized communication channels instead.

This could prevent “up to 80%” of social engineering scams, according to Lunglhofer.

Additionally, it’s crucial for crypto users to grasp the distinction between self-custody and custodial services provided by exchanges. In self-custody, similar to using Coinbase Wallet, you have full control over your assets, but it’s your responsibility to secure your private keys or seed phrases, which should always be kept confidential and never disclosed.

“You control [your wallet] — we have no control over that.”  

In a custodial crypto wallet, a trusted third party looks after your digital keys. They handle the safety and administration of your cryptocurrency holdings.

One recommendation from Lunglhofer that’s worth noting is being cautious about transferring cryptocurrency to individuals you haven’t met in person. Fraudsters frequently use emotional manipulation, such as romance scams, to deceive people, particularly in online environments where relationships can start virtually.

It seems, following the COVID-19 pandemic, an increasing number of individuals appeared quite isolated and susceptible to romance scams. It’s truly disheartening to witness such incidents, as these people are simply yearning for affection.

The rise of deepfake technology

As a researcher, I’ve observed the escalating danger posed by deepfake technology, a tool misused by scammers to deceive people into transferring their assets to bogus wallets, often under the guise of impersonating leaders. It’s crucial that we prioritize verifying video interactions, particularly as AI-generated scams become increasingly convincing. This includes scrutinizing supposed calls from family members requesting money.

According to Lunglhofer, Coinbase is exploring applications of Artificial Intelligence to identify fraudulent activities. Additionally, the platform employs machine learning techniques to scrutinize user actions and facilitate chat support in searching for indications of potential scams or unauthorized account access.

Cooperation between crypto exchanges

Apart from social manipulation frauds and artificial intelligence-generated false content (deepfakes), Lunglhofer additionally highlighted significant cybersecurity issues within the cryptocurrency realm, emphasizing the need for enhanced collaboration between various cryptocurrency service providers.

Coinbase participates in projects such as the Cryptocurrency Intelligence and Collaboration Hub, a platform that encourages cooperation among different market participants to exchange insights about emerging patterns, fraudulent activities, and potential weaknesses in security.

According to Lunglhofer, who is part of the Crypto ISAC’s board, forming strategic alliances is essential for enhancing the overall security within the cryptocurrency community.

It’s fantastic that crypto firms could collaborate to exchange insights… insights on potential scams, emerging patterns, or weaknesses that may impact the entire cryptocurrency community as a whole.

Cash is king in illicit activity

Additionally, Lunglhofer touched upon the issue of cryptocurrency’s image, focusing on allegations about its involvement in illegal activities. He highlighted that while it’s true that some forms of cryptocurrency such as Bitcoin have been linked to criminal acts, this perception is frequently overstated.

“Performing criminal activities without being traced is impossible if you use a blockchain. One of the key advantages of blockchain technology is that all transactions are permanently recorded, making them accessible for analysis and continuous scrutiny. This ensures transparency.

Read More

2024-11-06 22:10