The surge in Bitcoin price has led to an uptick in related crimes during the first three weeks of March, just as the cryptocurrency was moving to integrate into conventional financial markets – new research from the security firm ZeroFox shows.
The scams varied from straightforward phishing attempts to more elaborate pyramid schemes — but in each case, the familiar Bitcoin logo was front and center, employed as a way to gain the target’s trust – according to The Verge.
Over a three-week period, ZeroFox tracked 3,618 unique URLs linked to those scams, shared over 8,742 social media posts, although it’s unclear how many criminal groups were responsible.
The surge in activity came just as the price of bitcoin was reaching an all-time high. Many attribute the recent rise to a series of proposals that would allow investors to purchase portions of bitcoins as stock, adding more money to what has been a comparatively illiquid marketplace. The first proposal, made by the Winklevoss twins, was denied by the SEC on March 10th, but the price of bitcoin has remained above $1,000, a level not seen since late 2013.
There’s reason to think that jump in value is responsible for the crime wave. When bitcoin prices dropped after the March 10th ruling, ZeroFox saw a 16% drop in the volume of scams in the days that followed. “Ultimately, cybercriminals thrive on buzz,” says ZeroFox data scientist Phil Tully. “Bitcoin prices reaching new highs make the currency more tempting both for scammers and for their new potential victim
The scams tended to be fairly unsophisticated, either tricking users into installing malicious apps or promising free money in exchange for an initial payment. The pseudonymous and irreversible nature of Bitcoin transactions makes it easy for criminals to disappear once any transfer has been made.
In the cases observed by ZeroFox, those tactics were often combined with more familiar social media tricks, building fake profiles from stolen pictures to make the scam seem more legitimate. Given the scale of Facebook and other networks, that allows scams to travel farther and faster than ever before.
“In the end Bitcoin, just like social media, depends on community-based trust,” says Tully. “When certain members of these communities violate that trust, it can ruin a good thing for everyone.”
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