Recently, the FBI has issued a warning to Americans about using unregistered crypto services. Let’s have a look at the FBI Crypto Warning in detail below-
FBI Warns of Cryptocurrency Token Impersonation Scam
Cryptocurrency scams have always been an issue to worry about in the niche. And that’s what the FBI has cautioned the investors against.
- Impersonation Tactics: The FBI’s Denver division has issued a warning about criminals creating counterfeit cryptocurrency tokens resembling well-known stablecoins like Tether (USDT). These fake tokens are sent to victims using addresses that closely mimic legitimate ones previously used by the victims.
- Address-Poisoning Attack: Known as an address-poisoning attack, this scam exploits how cryptocurrency wallet software traces addresses, making the beginning and end of the address appear similar to familiar ones. However, the middle section is altered.
- Victim Impact: Victims often receive these impersonation tokens under the veil of trust or indebtedness. They realize the tokens hold no value only when attempting to use them at a cryptocurrency exchange.
Case Example –
In Colorado, an individual fell victim to a $2.1 million stablecoin investment scam. After investing, they were notified of an account lock and a $1.5 million fine for “malicious arbitrage,” which was later identified as involving impersonation tokens.
Security Tips
Here are some quick tips to prevent being a victim-
- Verify Addresses: Always double-check cryptocurrency addresses thoroughly before making transactions. Scammers typically manipulate addresses to resemble legitimate ones superficially.
- Blockchain Explorer: Use open-source blockchain explorers to verify tokens and address legitimacy. Some tools indicate if an address or token contract is associated with scam activities.
- Education: Continuously educate yourself about fake tokens and address poisoning attacks to stay cautious against evolving scam strategies.
FBI Advisory on Cryptocurrency Services
- Legal Compliance: The FBI warns Americans against using unlicensed crypto money transmitters that are not registered as Money Services Businesses (MSBs) and fail to comply with the regulations.
- Risk of Non-Compliance: Using unlicensed cryptocurrency services may result in financial disruptions during law enforcement actions, especially if funds are illegal or are a product of money laundering, very prevalent in the niche.
- Protection Measures: Before using any money transmitting service, verify its MSB registration status through the US Treasury Department’s FinCEN. Avoid services that do not comply with KYC requirements or are associated with illegal activities.
Suggested Read: Crypto Regulations In The US
How To Report The Fraud?
Victims of fraudulent cryptocurrency activities are urged to report incidents to the FBI’s Internet Crime Complaint Center (IC3) at www.ic3.gov. for investigation and assistance.
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