Web3 is rapidly advancing, and its adoption worldwide is increasing. Though it has many benefits, there’s a flip side to it. Cybercrime and cyber attacks have been ongoing in the space, leading to financial loss. Cybercrime attacks led to the loss of almost $3.6 billion in 2022. In 2023, at least $1.7 billion was lost. But despite the obvious decrease, the cyber attacks are yet to stop. On the 23rd of January 2024, an attacker made away with about $600,000.

The financial losses related to cyber scam incidents are always grave, but beyond them, there are several other disadvantages. Hence, as investors and participants in the web3 ecosystem, we must bridle up and take a precautionary stance. If you're wondering how, it begins with learning about the various types of web3 cybercrime.

With sufficient information about the pattern of these attacks, it'll be easy to identify them. Hence, you won't be gullible enough to prey to their tactics whenever they strike. That said, here are popular modes of cybercrime attacks to be watchful of in 2024.

Phishing

Phishing is a social engineering attack, a form of manipulation to lure users into divulging sensitive information or making security mistakes. Often, they aim to access their victim's private keys or passwords. The attacker often uses human interaction and emotions, such as urgency, to deceive unsuspecting victims.

Though phishing in web3 has different forms, the scammer mostly impersonates or pretends to be a trusted entity like a web3 firm, company, or exchange. Scammers employ various exploitation tactics when phishing, but the most common is sending dubious emails. They impersonate entities and send false emails containing links like airdrops or reward invites.

But the content of the emails isn't always URLs; it could even be an attachment. If the recipient opens the link or attachment, the scammers can access their account credentials and other private information, which they will use for theft. Phishing scammers can also create fake versions of cryptocurrency wallets to steal private keys.

Alternatively, the attackers can also advertise browser extensions as useful tools that individuals may want to download. An attempt at downloading this redirects the individual to a website from which the hacker steals their details. Or the extension may be malware in disguise.

Spoofing

Spoofing is another cybercrime tactic that’s Quixote rampant. It’s similar to phishing in the sense that it also involves impersonation. Scammers can use text messages, emails, URLs, or social media platforms to publicize false projects or to attract investors.

For example, you may receive an email from a credible exchange like Coinbase with a link to invest in a project seed phase. Clicking this link won’t redirect you to a different website. Rather, it’ll take you to a look-alike platform where you must sign in with your credentials.

When signing in, they collect your account credentials and wipe your funds. It may not always be an email; the attackers can be false accounts impersonating web3 influencers with which they spread misleading information. So, the various types of spoofing include DNS, MIMT, GPS, IP, Email, Website, and ARP.

Airdrop Scam

Attackers often take advantage of the hype surrounding free airdrops to steal funds and wallet information. Airdrop scam is another prevalent cryptocurrency attack in which the scammers send unsolicited tokens to an individual’s wallet. However, the victim must visit a website to claim these tokens.

Sadly, this is a trap website that the scammers will use to steal cryptocurrency from their victims’ accounts. Sometimes, the attackers go as far as hacking a famous person’s account to advertise and offer fake airdrops. They create fake websites and lure victims to register for airdrops.

But since the scheme is illegitimate, they use the registration details to wipe people's digital assets. Another approach is that the scammers send tokens requiring approval. When you approve this, they drain your wallet. Alternatively, they give baits asking investors to prepay a token to receive 10x or multiple rewards. They can also use rigged smart contracts to steal funds.

Pump and Dump

The pump-and-dump fraud in crypto projects follows a simple pattern. Scammers create a cryptocurrency with a small cap and list it. They then promote the project and spread false information to cause a price rise. They give false recommendations and exaggerate the investment's prospects to rouse interest in the project.

When this works, and the value of the coin or token inflates or pumps, they sell all their assets at the new high price. After the price pumps and unsuspecting investors buy these shares, it then drops. Hence, it becomes a failed investment as the crash causes the investors to lose money.

Sometimes, popular influencers can also partake in these scams. They can buy crypto cheaply, promote it, and convince their followers of its potential. Once the followers begin to buy, the price pumps, and the influencer dumps their investment. Now, the investors are left to bear the brunt.

Rug Pull

Web3 allows the formation of tokens with various utilities. Sadly, scammers have taken advantage of this to make money from false DeFi and NFT projects. Scammers create a token with a concise white paper, a road map, and even a website for the project in a soft rug pull.

They promote it such that it gains prominence among investors. They then list the newly launched tokens on decentralized exchanges. Everything will seem convincing and alluring, so investors will begin swapping their tokens for the project's native token.

With the increase in investments, the value of the native token will rise, leaving investors satisfied that they made the right choice by partaking in the project. Then, when the price of the native token reaches its peak, the scammers will crash the project and make away with the funds of their investors.

As for NFTs, they also implement similar practices by replicating popular collections. They then market and sell these fake replicas to their victims, thereby making away with lots of money by the time the entire collection is sold.

There’s also another format of this scam known as the hard rug pull. It’s very similar to the soft rug pull. The difference lies in the fact that for a hard rug pull, the project developer hardwires the project’s code with a flaw to allow fraud. With this, they steal liquidity through loopholes in the code.

Cryptojacking

Cruptojacking is another type of scam that occurs when hackers access a person’s device and use it to mine crypto. A prominent way through which they access peoples’ devices is through ads. That’s why you should be careful of the ads you open. Some have codes through which attackers infiltrate your system when you click on them.

Sadly, you won't notice anything wrong because the codes operate in the background. The only effect that it might have is system lags. So, your device will begin to excite commands less speedily. While the attackers don't steal your funds in this case, they use your resources to make money without your awareness.

Avoiding Cyber Attacks

Cyber attacks keep recurring with grave detriments. So it’s not just enough to know the risks; you must also seek preventive measures. Luckily, you can protect yourself from the different forms of cybercrime on web3. To do this, you need to observe certain measures.

So, for starters, never give out your pass keys, wallet information, password, or sensitive data. If you receive any invite for an airdrop or a link asking you to claim a reward, don't be fast to click it. Rather, spend time investigating its authenticity.

Most airdrops have proper, widespread publicity, and awareness is created early and not within a limited time. So, don’t fall prey to the sense of urgency that scammers try to create. If you’re unsure of an airdrop’s legitimacy, investigate the project, read its white paper, and confirm that it’s listed on a credible aggregator website.

An extra precautionary measure is not to approve unknown tokens. If you do, the sender will gain permission to clear tokens from your wallet. It’s also wise to avoid token doubling schemes and unknown smart contracts.

Also, if you ever want to download an extension, use a trusted platform like the Google Chrome web store. Similarly, don’t use shared links to download wallets; visit the official website or use your device’s App Store. If you’re redirected while trying to access a website, check the URL and SSL certificate of the website you’re being sent to ensure it’s secure.

Additionally, always conduct comprehensive market research before investing in any crypto project and be wary of stock advice from strangers. Before investing in any web3 project, gather information about the founders, team, and contributors.

If this information is scarce, avoid that project, no matter its potential. Also, when studying a project's white paper, ensure it passes a KYC verification and smart contract audit. You can also use an effective ad-blocking tool to prevent ads from popping up. This way, you’ll be less likely to click on false ads.

Cybercrime can drain your savings, lead to data loss, and disrupt ongoing business. Its effects can be disastrous, so do your due diligence to prevent yourself from becoming a scam victim as you explore the web.