Key Takeaways

Keep your seed phrase offline to safeguard against digital theft.

Be vigilant against spoofed influencer social media accounts by verifying profile authenticity.

Avoid accessing your crypto wallet or making transactions over public WiFi.

Be cautious of livestream videos promising crypto giveaways. Check the channel's legitimacy and promotion style.

Be vigilant against AI-generated deepfake scams by paying attention to inconsistencies in video and audio.

As cryptocurrencies increasingly enter the mainstream, concerns about their security have become more pressing. Every year, cybercriminals steal staggering amounts of digital assets. Staying vigilant is key to protecting your cryptocurrency investments in this dynamic environment. This article will outline the top five security best practices to help you shield your digital assets from various threats.

How Can I Secure My Cryptocurrency Holdings?

To secure your crypto holdings, you must always be vigilant as to what scammers can do and be proactive with your protective measures. Below are some steps you can take to secure your digital assets.

1. Secure Your Seed Phrase

Your seed phrase (also known as recovery phrase) is the gateway to your wallet and cryptocurrency holdings. It's a sequence of 12 to 24 words that serves as your wallet master key in case you lose access to your wallet or need to migrate to a new device. Below are some tips on how to secure your seed phrase.

Store your seed phrase offline

The moment you get your seed phrase, avoid saving it in local folders or cloud storage. Storing the phrase online may expose it to potential hacks. The safest approach is to store them offline.

One way to do this is by investing in a hardware wallet that can generate your seed phrase and store it offline. Another option is to back up your seed phrase physically inside a vault or safe. You could use a paper backup, but it’s safer to use a metal plate with the seed phrase engraved.

Split your seed phrase

If you want to enhance the security of your seed phrase further, you may split it into multiple parts and store them in different secure locations. Keep copies of your seed phrase in various physical places, such as bank vaults, safety deposit boxes, or trusted individuals. Ideally, no one but you should have access to all parts of your seed phrase.

2. Beware of Social Media Account Spoofing

Social media platforms have become breeding grounds for cryptocurrency scams, with scammers creating fake accounts that closely mimic well-known exchanges or celebrities. Below is a reminder from the real Vitalik Buterin, warning users about the thousands of fake profiles out there pretending to be him.

These malicious parties try to dupe and scam users by mimicking or spoofing well-known accounts. Here are some steps to protect yourself from social media account spoofing.

Check for verification signs: Look for blue check marks or verification symbols on profiles. However, be aware that these can be faked or bought. 

Check the handle: The handles are usually a giveaway for fake profiles. Savvy scammers will try to keep the names as similar to the original ones as possible. For example, “@Vita1ikButerin” instead of “@VitalikButerin”.

Scroll: Scroll through the profile and try to see some historical posts. This should give you an idea about the profile’s authenticity.

3. Avoid public WiFi

Public WiFi networks are notorious for lacking security and susceptibility to cyberattacks. Accessing your cryptocurrency wallet or conducting transactions while connected to public WiFi can put your assets at risk.

Public WiFi networks are vulnerable to a range of cyber threats, including:

Evil twin attacks: Hackers set up malicious hotspots with trustworthy names (e.g., "Guest WiFi Hotel") to intercept your data when you connect.

Man-in-the-Middle (MitM) attacks: Malicious actors can intercept data transmitted between a WiFi router and a user's device, potentially accessing sensitive information like login credentials.

Password cracking attacks: Scammers use software to attempt numerous username and password combinations to unlock a router's management interface.

Avoid using public WiFi networks when accessing cryptocurrency accounts or executing transactions. For more information, please check Why Public WiFi Is Insecure.

4. Watch out for fraudulent livestream videos

Scammers have turned to platforms like YouTube and Twitch to spread cryptocurrency fraud. Typically, scammers use stolen video content to run fake livestreams that promote fake giveaways. In some cases, they will use hacked YouTube accounts with millions of followers and try to convince users to join their giveaways by sending some cryptocurrency to specific addresses.

For example, you could come across a video of Elon Musk, Cathie Wood, and Jack Dorsey discussing crypto and blockchain technology. However, scammers may use a legit video to promote their fake or stolen channel and a fraudulent giveaway.

Make sure you do your due diligence before engaging with any live video, especially those related to cryptocurrency giveaways. In the vast majority of cases, the giveaways will ask you to send money first before receiving anything back. But you will lose your money if you do that.

Verify the legitimacy of the channel by considering factors such as the number of videos, the presence of verification badges, and the channel's creation date. But be careful and make sure to check multiple data points because hacked accounts may seem legit at first and even have millions of subscribers.

In addition, you can check the official social media accounts of the people involved in the video. If the promotion is legit, you should be able to find some information from multiple reliable sources.

5. Beware of AI Deepfake Scams

Deepfake technology uses artificial intelligence (AI) to create fake videos that look real. It combines existing images and videos to make it seem like people are doing or saying things they never did. As you can imagine, scammers have started using deepfake to create highly intricate scams.

Hackers use deepfake to pose as someone else or pretend to be experts. Hackers often trick their victims with fake contests or investment opportunities, rushing them with deadlines.

So, what can you do to protect yourself from these deepfake scams?

Pay attention to the face: At the end of the day, deepfake stitches together numerous images to create the content. Pay attention to blinking patterns and lip-syncs.

Inconsistent audio: Robotic-sounding voices or unusual fluctuations may indicate a deepfake. Make sure you are closely listening for any inconsistencies in audio quality.

Questions: When interacting with a suspected deepfake, make sure you ask many questions that only the real person will know. Make sure you have some background information to continually cross-reference for validation.

Closing Thoughts

Protecting your cryptocurrency assets is your responsibility. In this article, we have detailed five best practices to keep your coins safe:

Secure your seed phrase.

Beware of social media account spoofing.

Avoid public WiFi.

Be wary of fake livestream videos.

Beware of deepfakes.

As time progresses, scammers become more sophisticated, devising intricate schemes. At the end of the day, knowledge and vigilance are your strongest allies. Stay informed, stay secure, and protect your digital wealth.

Further Reading

5 Ways to Improve Your Binance Account Security

How to Spot Scams in Decentralized Finance (DeFi)

Pyramid and Ponzi Schemes

Common Scams on Mobile Devices

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

In crypto, an airdrop is a common marketing strategy used by projects to distribute free tokens to users, typically as a way to increase awareness and encourage adoption.

Airdrop scams are fraudulent schemes in the crypto space that lure users with promises of free tokens or coins, aiming to steal their crypto holdings.

This article covers what airdrop scams are, how they usually operate, and how you can protect yourself and your assets from scammers.

Introduction

In recent years, airdrops have emerged as a widely used marketing strategy for cryptocurrency projects to distribute their tokens to potential users and investors. However, with the rise in airdrop popularity, there was also a significant increase in the number of airdrop scams. In this article, we will delve into what airdrop scams are, how they operate, how they look, and most importantly, how you can protect yourself and your crypto assets.

What Are Airdrop Scams?

Airdrop scams refer to fraudulent schemes designed to deceive cryptocurrency users by offering fake airdrops – supposed giveaways of tokens or coins. These scams exploit the allure of free tokens to trick beginners and unsuspecting individuals into connecting their crypto wallets to malicious websites, transferring assets to fraudsters, or disclosing sensitive information.

How Airdrop Scams Work

Most airdrop scams will involve some sort of phishing technique that lure users into malicious websites. Let’s go through some common methods.

Fake airdrop promotion

Scammers set up phishing websites mimicking legitimate airdrop and promote it through various channels, including social media, email, and messaging platforms. Their goal is to trick users into revealing their sensitive information or connecting their crypto wallets. 

In other words, they lure users by promising free tokens in exchange for participating in the airdrop. Once users express interest, scammers may request personal information, wallet addresses, or even private keys under the guise of claiming the airdrop. However, instead of receiving tokens, victims may find their wallets drained or compromised.

Impersonation

Scammers impersonate well-known cryptocurrency exchanges or influencers to gain credibility and lure victims into participating in fraudulent airdrops. Scammers may also hack into legitimate accounts to take advantage of their followers.

Unsolicited crypto or NFTs (non-fungible tokens)

Be careful if you find assets in your wallet that you never bought or asked for. Scammers may distribute unsolicited crypto or NFTs to users’ wallets in an attempt to promote malicious websites. Typically, users can find the scammer’s website when checking their wallets on a block explorer or as part of an NFT image that suddenly showed up in their wallets.

Note that victims may also lose funds when trying to sell or transfer tokens received from scammers. If you receive suspicious tokens, do not try to sell or interact with them.

Identifying Airdrop Scams

Here are some red flags to watch out for when evaluating potential airdrops:

1. Unrealistic promises: Beware of airdrops promising exorbitant rewards or returns without any effort or investment on your part.

2. Suspicious requests: Exercise caution if an airdrop requires you to connect your wallet to a website or to disclose sensitive information such as private keys, recovery phrases, or personal details.

3. Lack of transparency: Scrutinize airdrop projects lacking clear documentation, whitepapers, or reputable team members.

4. Phishing attempts: Stay vigilant against phishing tactics, including fake websites, emails, and social media accounts impersonating legitimate projects or influencers.

Examples of airdrop scams

In the example below, the victim receives an NFT that contains the scammer’s website embedded in the token name.

Below are examples of scam NFTs distributed to Solana users, inviting them to participate in fake airdrops. This happened right after the legitimate Jupiter airdrop.

How to Avoid Airdrop Scams

Use burner wallets

A burner wallet is a crypto wallet you create specifically for a single-use, making them suitable for riskier interactions. The idea is to only use it with a small amount of crypto, so you can limit your losses if something goes wrong.

Conduct thorough research

Before participating in any airdrop, conduct extensive research on the project, its team members, and its objectives. Verify the legitimacy of the airdrop by checking official sources, such as the project's website, social media channels, and reputable cryptocurrency forums.

Exercise caution with personal information

Never disclose your private keys, recovery phrases, or other sensitive information to unknown or untrusted parties. Legitimate airdrops do not require such information to participate. Be wary of any requests for personal data, as they may be phishing attempts by scammers.

Verify authenticity

Double-check the authenticity of airdrop announcements and promotions through official channels. Look for signs of legitimacy, such as official branding, clear communication channels, and endorsements from reputable sources within the cryptocurrency community.

Stay informed and alert

Stay informed about common airdrop scam tactics and remain vigilant against potential threats. Keep yourself informed of the latest developments in the cryptocurrency space and learn about the best practices for protecting your assets.

Reporting and Taking Action

Report suspicious activity

If you encounter a suspected airdrop scam or fraudulent activity, report it to the relevant authorities, such as cryptocurrency exchanges, regulatory bodies, or law enforcement agencies. By reporting scams promptly, you can help prevent further harm to yourself and others in the community.

Secure your assets

In the event of a suspected compromise or security breach:

Take immediate action to secure your assets.

Transfer your funds to a secure wallet or exchange with robust security measures in place.

Consider enabling additional security features, such as two-factor authentication (2FA), to protect your accounts from unauthorized access.

Conclusion

Airdrop scams pose a significant threat to cryptocurrency users, but with awareness, vigilance, and proactive measures, they can be effectively mitigated. By understanding the tactics used by scammers, identifying red flags, and adopting best practices for safeguarding your assets, you can navigate the cryptocurrency landscape with more confidence and peace of mind. Remember, the key to avoiding airdrop scams lies in staying informed, exercising caution, and trusting reputable sources.

Further Reading

5 Tips to Secure Your Cryptocurrency Holdings

What Is Phishing and How Does It Work?

Common Bitcoin Scams and How to Avoid Them

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer here for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.