Mahesh, 39, a Hyderabad-based businessman was recently duped out of Rs 80 lakh by scammers who allegedly operated a fake cryptocurrency exchange. He claimed that between December 2021 and April 2022, he invested Rs 80 lakh in a crypto exchange whose URL ended with a ‘.ac.sh’ extension.
Mahesh has now filed a complaint with the Cybercrime Unit. Mahesh told police he learned about the crypto exchange through a friend. Police have now filed a complaint under Sections 66-C and 66-D of the Information Technology Act and 419 and 420 of the Indian Penal Code against unidentified fraudsters for operating the bogus exchange.
By the way, this is not the first incident where people have been tricked with such tactics.
A 2022 Crypto Crime Report from Chainalysis, a Singapore-based Blockchain data platform, said cryptocurrency-based crime hit a new high in 2021, with illicit addresses receiving $14 billion in during the year, compared to $7.8 billion in 2020. .
To understand the technological flaw and how cyber authorities are handling these crimes, Outlook Money reached out to some senior law enforcement officers who investigate these crimes, as well as technology experts to better understand how investors could protect themselves.
What technical flaw leads to such crimes?
Sandeep Shukla, professor of computer science and engineering at IIT-Kanpur and co-director of the National Blockchain Project explained that there are basically two types of crimes.
In the first type of crime, a cryptographic protocol is deployed by honest accounts to create an application, but malicious attackers gain access to it by finding a security flaw in the protocol or smart contract, then perform a transaction or sequence of transactions. to use the protocol. Examples include the Decentralized Autonomous Organization (DAO) attack on Ethereum and many other recent attacks on De-Fi protocols.
Another type of crime is based on the cover of pseudo-anonymity that public Blockchain platforms provide. Here people engage in activities under the guise of anonymity such as scams, phishing, gambling, money laundering, NFT scams, etc.
“With modern crypto-forensics tools, we can sometimes break pseudo-anonymity, but if they use VPN/TOR etc, and also use fake KYC with exchanges, or if they use exchanges outside of jurisdiction, they can get away with it”, explains the professor. Choukla.
Gaurav Mehta, founder of Catax, a crypto-taxation, auditing and forensics start-up also pointed out that the majority of crimes occur when individuals manage their own private keys which are susceptible to hacking and termination, where individuals are incentivized to disclose their private keys in one form or another with various schemes promising quick returns.
However, it warns against installing pirated software, unauthenticated apps and browser extensions.
Challenges Cyber Authorities Face When Solving Cybercrimes
Triveni Singh, Superintendent of Police, Cyber Crime at Uttar Pradesh Police, told Outlook Money that one of the biggest challenges with crypto-related crime is tracking.
“Every time a crime happens and we ask for data, they are not able to show it. But now, to track such cases, we are getting help from some companies that provide us with tools to trace them. I can’t share the company name, but these tools help us know how transactions are going. Based on this, we use open source intelligence to trace such cases,” he says.
A report by Chainalysis noted that in 2021 alone, Indian users visited crypto scam websites over 9.6 million times. The most visited scam websites in India are coinpayu.com, adbtc.top, hackertyper.net, duamine.com and coingain.app. These five websites alone received around 4.6 million visits from Indian users.
Ankush Mishra, ACP, who looks into money laundering, crypto and cyber crimes for Uttarakhand Police, pointed out that one of the challenges for them in crypto crimes was that several criminals had created groups WhatsApp where they had their own employees as administrators.
“These criminals use these groups as a net and try to present their shady investment schemes through which they try to influence ordinary people to invest in such investments,” he says.
He further noted that another challenge they faced was that although these exchanges have expanded their business, but at the same time, they do not know anything about the wallets where the money comes in.
The two senior police officers asked people not to believe scam calls, messages and social media posts that promise high investment results.
How can investors exercise caution?
Professor Shukla asked people not to get into crypto investing because the whole scenario (of crypto investing) looks like a Ponzi scheme – which is based on speculation and manipulation by owners of crypto.
“The fact that it’s so complex for regulators or law enforcement to do a lot right now, it’s best to avoid crypto as an investment vehicle, especially as a long-term investment. long term,” he said.
Divakar Prayaga, SVP and Chief Information Security Officer, CoinDCX recommends investors to refrain from clicking phishing links received via email/SMS and not downloading untrusted software or malicious files from Internet that may contain malware.
Aritra Sarkhel, director of WazirX, a crypto exchange shares some points to stay more cautious.
Research what communities are saying about crypto and founders on Telegram and Reddit groups/forums.
Check the resilience of crypto on exchanges in case of major dips.
Please resist the fear of missing out (FOMO). Just because a crypto is trending, don’t just jump in and invest in it.
Do not trust random “influencers” on You Tube/Instagram for certain cryptos. Research first, buy later.
You don’t need to buy all of the crypto. You can buy fractions of a crypto. It’s like a split investment in stocks in the US market.
Understand taxation depending on the country you are in.
We wish to say thanks to the writer of this short article for this outstanding material
Crypto Cryptic? Crime Is Steadily Rising In The Crypto World; Advice From The Cops Beware Of Investors Tech Tribune France
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