Social engineering scams top threat to crypto users

Social engineering scams are currently the biggest threat to crypto users and holders, according to Jeff Lunglhofer, Coinbase’s chief information security officer.

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

“Social engineering scams are by far the number one threat to crypto enthusiasts, crypto holders, and investors today,” Lunglhofer said.

Three ways to avoid social engineering scams

Lunglhofer emphasized that although these scams are not specific to the crypto industry, their frequency has increased in the last few years. He suggested two key precautions to avoid crypto scams.

First of all, ignore unsolicited calls claiming to be from reputable exchanges like Coinbase or Kraken. If you receive a call, hang up, go directly to the company’s website, and contact them through official channels.

According to Lunglhofer, this can prevent “up to 80%” of social engineering scams.

Second, crypto users need to understand the difference between self-custody and exchange custody. With self-custody like Coinbase Wallet, you control your assets and must protect your seed phrases, which should never be shared.

“You control [your wallet] – we have no control over this.

An exchange custodian is a type of crypto wallet in which a third-party service manages your private keys. This provider is responsible for the security and management of your crypto assets.

The third piece of advice Lunglhofer shares is to avoid sending crypto to people you don’t personally know. Scammers take advantage of emotional connections through romance scams, especially in online environments where relationships often begin virtually.

“I think, especially after Covid, people are lonely and vulnerable to attacks. [romance scams]And it’s so sad to see people go through this. They just want to be loved.”

The rise of deepfake technology

Lunglhofer noted the growing threat of deepfake technology, which scammers use to impersonate leaders and trick individuals into sending assets to fake wallets. Lunglhofer highlighted verification of video interactions, especially as AI-driven scams such as fake calls asking for money from family members become more believable.

According to Lunglhofer, Coinbase sees use cases of AI to detect fraud. Coinbase also uses machine learning to monitor user activity and bolster conversations for signs of fraud or account takeover.

Cooperation between crypto exchanges

Beyond social engineering scams and deepfakes, Lunglhofer also noted broader cybersecurity issues in the crypto space, including better collaboration between cryptocurrency platforms.

Coinbase is involved in initiatives such as the Crypto Information Sharing and Analysis Center, which encourages collaboration between industry players to share information on trends, scams, and vulnerabilities.

Lunglhofer, a board member of Crypto ISAC, believes that such partnerships are crucial to improving the security of the entire crypto ecosystem.

“What a great opportunity for crypto companies to come together and share information about scams, trends we are seeing, or vulnerabilities that could impact the broader crypto ecosystem.”

Cash is king in illegal activities

Lunglhofer also touched on concerns about the reputation of cryptocurrency, particularly its use in illegal activities. He pointed out that although cryptocurrencies such as Bitcoin (BTC) are associated with criminal activities, this narrative is often exaggerated.

“If you want to commit a crime and remain anonymous, blockchain is the last place to do it. The great thing about blockchain is that every transaction takes forever. It is open to analysis, constant review and transparency.”