FBI warns crypto investors about liquidity mining scams

Attackers have stolen more than $70 million since 2019 through a successful new scam, according to the Federal Bureau of Investigation.

The FBI issued a warning warning crypto investors that an investment strategy called “liquidity mining” used to generate passive income is often a fraudulent tool:

“In legitimate liquidity mining operations, investors place their cryptocurrency in a pool to provide traders with the liquidity needed to conduct transactions. In return, the investor should receive a portion of the trading commissions.”

Fraudsters, in turn, convince victims to link cryptocurrency wallets to their liquidity mining applications, after which the victims’ wallets are completely empty without notifying the owners. Often, scammers contact victims through social networks, dating apps, and instant messengers.

According to the FBI, victims of such fraud transfer cryptocurrencies from their wallets to a liquidity mining platform, and after investing, they often see the amount of expected profit in a fictitious interface. Believing that their investment has been successful, they buy additional cryptocurrencies. Fraudsters actually move all the cryptocurrency stored by the victim to their wallets:

“Since January 2019, according to the FBI’s Internet Crime Complaint Center and public sources, the new scheme has resulted in more than $70 million in cumulative victim losses.”

Earlier, FBI agent Sean Ragan told CNBC that crypto scammers pose a particularly serious threat on LinkedIn, where “there are already many victims and potential victims.”