With the rapid adoption of cryptocurrency across sectors and industries, both individuals and businesses are facing an increased risk from fraud.
In fact, the US FBI has already reported a terrifying 45% increase in cryptocurrency-related frauds and scams between 2022 and 2023, totalling more than $5.6 billion worth of losses for the victims.
One of the biggest threats is cryptocurrency account takeover (ATO) fraud, which exploits the vulnerabilities in digital wallets, trading accounts, and exchange platforms. If you’ve already fallen victim to crypto criminals, you’ll need a professional ATO fraud investigation.
Others who’ve had more luck in this department should learn how to protect their accounts or brace for the attack. Here’s everything you need to know.
What Is Cryptocurrency ATO Fraud?
ATO stands for “account takeover,” and this is literally what happens when criminals come for your cryptocurrency. ATO frauds typically involve weak credentials and other cybersecurity vulnerabilities that are easy to hack or otherwise exploit. Cryptocurrency is especially exposed to this threat because of the blockchain, as explained by the FBI:
“Since cryptocurrencies eliminate the need for financial intermediaries to validate and facilitate transactions, criminals can exploit these characteristics to support illicit activity such as thefts, fraud, and money laundering.”
Once they gain access to your account, criminals can steal your assets and collect sensitive data they can use for large-scale attacks. Businesses have even more to lose: ATO criminals can use their accounts to execute large trades or manipulate market prices.
What Vulnerabilities Make You Exposed?
There are many ways to gain unauthorized access to a cryptocurrency account, and criminals are getting more creative by the minute. Still, some vulnerabilities especially expose you to account takeovers, namely poor security and unsafe online behavior.
The four common strategies for executing an ATO fraud are:
- Malware attacks–Computers that are not protected by antivirus systems and users who are not careful when using the internet are easy targets for malware attacks, which use viruses to steal account credentials and other sensitive information.
- Phishing attacks–Research suggests that over 31,000 phishing attacks happen every day, and many of them are successful. It is easy to fall victim to a phishing attack because it catches you with your guard off: in your mailbox, expecting an important message.
- Credential stuffing–83% of breaches in 2023 were caused by stolen credentials. In this type of attack, cybercriminals use credentials stolen in one breach to take control of unrelated accounts, exploiting our habit of repeating passwords.
- SIM swapping–Negligent mobile providers can be tricked into transferring your phone number to a fraudulent SIM card, which gives criminals access to your phone calls and SMS texts and allows them to see your two-factor authentication codes.
Has Your Account Been Compromised?
Using these and other types of attacks in the absence of strong security practices, criminals can seize control of virtually any account. The usual telltale signs of cryptocurrency account fraud include:
- Unauthorized transactions or withdrawals from your digital wallet;
- Notifications of login attempts from unfamiliar devices or locations;
- Your account has been locked without any explanation or notice;
- Changes in your email address, phone number, or other account details.
If you have a reason to suspect your account has been compromised, you should contact your wallet provider to freeze it immediately.
How to Protect Your Account Against Fraud?
Identifying criminals and bringing them to justice usually takes a long time. In most of these scenarios, prevention is more effective than cure.
Since cryptocurrencies rely on the blockchain for transactions, managing crypto keys is the first step to securing your digital assets. Some of the best practices include hardware wallets, which store keys offline; encrypted key backups, which can be stored in multiple locations; and multi-signature wallets, which require multiple authentication of transactions.
Basic device security is another crucial measure for individuals, while businesses need more advanced systems and protocols. If you’re worried about your computer at home, installing a trustworthy antivirus is usually enough, along with regular system updates. Business computers need robust protection, including encryption, user access control, and backup and recovery plans.
It’s been said over and over again that over 80% of cybercriminal incidents are caused by human error. The best way to save your systems and accounts from takeover is to practice safe online behavior. Make sure your passwords are unique and strong, and have a different one for each account. In addition to that, you should learn to recognize phishing attempts. All this, and more, is covered by employee training as prevention in the business environment.
Conclusion
Account takeovers and cryptocurrency thefts are not that difficult to prevent—the only thing it takes is basic computer security handled by a conscious and responsible user. You can take the first measures right now by checking for available system updates.
If you’ve already been unlucky and you’re looking for ways to recover your stolen assets, the best course of action is to freeze your account and seek an experienced crypto lawyer. In case you’ve lost a sizable sum, you should also inform the police.
