The Multi-Signature Wallet looks like a regular crypto wallet, where you can see the total balance, deposit funds etcetera but you can't withdraw funds because multi-signature wallets require 2 or more private keys to sign transactions.
For example, Suppose I have an 'X' wallet on my smartphone, a 'Y' wallet on my PC, and a 'Z' wallet on my iPhone. So I created a multi-signature account where 2 out of my 3 wallets need to sign to approve any given transaction.
How Do Scammers Use Multisig Wallets?
1️⃣Scammers create a Multisig wallet and share recovery phrases and the private key of that wallet on social media platforms and other crypto-related groups.
2️⃣When a user imports recovery phrases or private keys into his/her crypto wallet, s/he sees a very big amount in the wallet, but without enough gas fees to execute a transfer.
3️⃣After that, obviously, the user will try to deposit crypto to pay the gas fees but deposited funds will be instantly transferred out via bot to the scammer wallet.
Note: Even if scammers won't transfer your deposited funds instantly, you won’t be able to withdraw anything from that wallet because a group of users is required to sign to approve a transaction in a multi-sig wallet.
What's The Solution?
Avoid interacting with anything that looks too good to be true. I hope you found this short article helpful.
