- When it comes to trading cryptocurrencies in a decentralized environment, there needs to be a pool of liquidity for both currencies being exchanged.
- They’ll even generate fake reports to further convince the victim of great earnings, and in some cases, they’ll even allow for withdrawals early on.
- In reality, though, the target’s victims were being drained until there was nothing left.
Sophos says that liquidity mining schemes are the newest addition to an already extensive armoury as reported by Tech Radar.
Cybercriminals taking advantage
Experts have cautioned that cybercriminals and fraudsters are taking advantage of the DeFi frenzy to defraud users of their hard-earned cryptocurrency tokens.
Sophos researchers discovered an ongoing effort that preys on folks with limited awareness of Decentralized Finance (DeFi), a nascent crypto area, and steadily drains their assets until they have nothing left.
The new ads are dubbed “Liquidity Mining Scams” by Sophos, which warns anyone involved in cryptocurrency trading to be wary of offers that seem too good to be true.
Earning millions, or losing thousands?
The rise of blockchain has given birth to something known as “smart contracts” – essentially pieces of code that act as the middleman and allow two parties to engage in a transaction of value, when certain conditions are met, without the need for an intermediary.
When it comes to trading cryptocurrencies in a decentralized environment, there needs to be a pool of liquidity for both currencies being exchanged.
Users are being incentivized to provide this liquidity (lend out their coins, essentially) by receiving a percentage of the trading fee associated with a specific DeFi protocol, among other things.
Sophos says they’ll create fake apps, fake protocols, or fake tokens, and reach out to potential targets via social media using fake identities.
They’ll even generate fake reports to further convince the victim of great earnings, and in some cases, they’ll even allow for withdrawals early on.
In reality, though, the target’s victims were being drained until there was nothing left.
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Source: Tech Radar
