- A new scam called “Liquidity Mining Scam” has popped up.
- FBI warns users to stay cautious.
- The scam has caused over $70 million in loss.
The Federal Bureau of Investigation (FBI) warned cryptocurrency owners of fraud targeting them in an investor advisory released on Thursday.
The FBI is issuing this public service announcement to warn American citizens about a cryptocurrency scam using an investment strategy called liquidity mining in which scammers exploit owners of cryptocurrency, typically tether (USDT) and/or ethereum (ETH).
The FBI gave a narrative about the new scam, stating that liquidity mining is a new investment strategy that lets users earn passive income with crypto. Scammers cash in on this opportunity by asking users to connect their wallets to scammy liquidity mining apps.
Once the wallet is connected to the app, the users are drained of their funds without any permission needed.
The warning from the FBI states the approach the scammers take includes sending DMs on social media like Instagram, Twitter, and Facebook and also dating apps.
According to the FBI, victims of a liquidity mining fraud transfer Bitcoin from their wallets to the liquidity mining network. They frequently observe the alleged results on a fabricated dashboard after investing.
Victims invest in more cryptocurrencies because they think their initial investments were successful. Scammers eventually transfer all cryptocurrencies held in storage and investments made to a wallet under their control.
The FBI’s note highlights the intensity of these scams. A record of $70 million in combined losses is calculated based on the complaints received. The number of unreported losses could be even higher.
The soaring adoption and the lack of basic education by new crypto enthusiasts who enter the crypto realm are luring more scammers to cash in on this opportunity.