Cryptocurrency Scams Becoming More Frequent in India

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Indian cryptocurrency users are more at risk of being scammed than ever before. Hackers and cyber criminals are targeting the less security aware with increasingly elaborate schemes.

Cryptocurrency Security is the Responsibility of the Users Themselves

A report in Quartz states that the number of Indian cryptocurrency-related crimes is rising quickly. There are many ways that criminals are using the financial innovation. These include phishing, hacks, multi-level marketing schemes, and even kidnappers have demanded ransom payments be made using digital currency.

Phishing is one of the the oldest ways to defraud someone online. The premise is a simple one. An email is sent from a legitimate looking address that uses similar formatting to official correspondence from whatever the company chosen uses. The target is asked to fill in details and return the email. This allows attackers to access the accounts of the victim.

Examples of ransomware and hacking are also rising in India. According to Quartz, a cryptocurrency investor from New Delhi lost Bitcoin worth around $10,000 to hacking. She appealed for help to get the funds returned. Unfortunately, the individuals that she contacted managed to steal more Bitcoin from her, this time amounting over $50,000.

There are also more examples surfacing of fake applications and social media accounts being used to defraud digital currency users. In one high profile case hackers made a Twitter account that imitated that of the Zebpay exchange. They messaged followers of the official Zebpay twitter account asking them to deposit money with them. In return, they were promised a larger payment in Bitcoin.

Classic ponzi schemes are also being used with increasing frequency in India. GainBitcoin, a company founded by Amit Bhardwaj, promised investors 10% returns on their initial stake every month. Many people were duped by the scheme that involved them signing up more investors to continue the multi-level marketing scam.

Of course, Indian cryptocurrency exchanges too can fall victim to attacks. The unfortunately named Coinsecure was compromised to the tune of 438 Bitcoin in April. It was later revealed that this was an inside job by one of the employees at the exchange. It was the first time such a crime has been committed in India. However, globally exchange hackings are common.

Finally, even traditional criminals have turned to cryptocurrency too. According to the report in Quartz, nine police officers in Gujarat were accused of kidnapping a businessman in April. In exchange for his freedom, the group demanded payment in digital currency.

However, Indian cryptocurrency firms contest that it’s not the industry itself that is to blame for the rising criminality surrounding it. The head of a cryptocurrency exchange who didn’t want to be named told Quartz:

“Wherever there is money, there will be scams and there is nothing surprising about that… But that doesn’t mean that you can blame the whole system because investors are being stupid and jumping into these random money-making schemes or clicking on strange links to make a quick buck.”

The rise in crimes associated with cryptocurrency is not a situation unique to India. Earlier this week, we reported that an estimated $1.1 billion in digital currency had been stolen by various means in 2018 alone.

Featured image from Shutterstock.