Bitcoin

Never ask someone to create BITCOIN wallet for you. Here’s why

Earlier I had posted about cryptocurrency scams list wherein we had discussed eight different types of scams that are currently being performed in the crypto world.

Now there seems to be another kind of scam wherein a scammer will offer you to help create and fund bitcoin wallet (blockchain.com) account and once you do, they run away with your bitcoins by simply hijacking your wallet using “Backup Recovery Phrase”.

Usually, the attack begins with bitcoin mining offers which require the user to invest some money and earn consistent profits or fixed interest on the invested amount. You can scroll down to read the actual conversation with the scammer.

When you signup for a bitcoin wallet account on blockchain.com, You only need to enter an email and password of your choice. Once your wallet is created, blockchain.com will send you an email with your wallet-id. So the next time you log in, you need to enter wallet-id & password.

However, if you goto “security center” section inside your blockchain dashboard, you can enable a couple of security checks like 2-FA and you can also backup “Recovery Phrase” which allows you or anyone else with access to it, to restore your wallet and access your funds if you forget your password.

It doesn’t matter if your wallet has a strong password or has 2 step verification enabled. If I have access to your “Recovery Phrase”, I can restore your wallet anytime at my end and drain out all your funds.

So when you ask or let someone create blockchain wallet for you, he/she will create an account for you and before handing over login details, they can easily take a backup of “Recovery Phrase”.

how bitcoin wallet hacking works

The scammers are making use of this same technique for hijacking newbie users bitcoin wallets by giving false promises over mining profits. They make it seem safe because you aren’t sending them any money and let you change the password to the wallet they set up for you after. But they don’t need your password, 2-FA or anything else if they have your Recovery Phrase.

Here’s how the bitcoin wallet scam works

The modus operandi: The scammer creates your wallet for you then they have the private key and backup phrase. He hands over the newly created blockchain.com account to you and asks you to fund the wallet. once you transfer your bitcoins into it they restore it on their end using the backup recovery phrase and withdraw your bitcoins.

The crooks essentially approach newbie bitcoin users who are looking for investing their bitcoins to gain interest or people who are interested in mining schemes.

Once they successfully lure someone into their scam, they then try to build trust with them. Let’s look at this conversation of one Brady Peck, a crypto enthusiast who confronted a scammer who first tried to lure his friend into mining scam.

On a serious note, if someone you met online is pitching you with offers that are too good to be true, it’s a wise idea to treat it with the utmost suspicion, no matter what reasons they give or how influential they are. Blocking/reporting profile is the best option, but if you’re in a mood to understand the scam, feel free to use this post as a template for your response.

bitcoin wallet scam 1

The guy is talking about Antminer, a bitcoin mining hardware. It’s not a desktop PC or a dedicated graphics card mining rig — it’s something else, Its an ASIC hardware which means it is designed with a singular purpose i.e to mine bitcoins. And it is comparatively easy to set up as opposed to setting up a mining rig suing graphics card.

bitcoin wallet hacking 2

15% ROI in 3 days with bitcoin mining is huge!

Here’s the catch, see how conveniently the scammer is pitching his mining scheme which is in itself ridiculous. At this point, Brady realizes this one, is a dumbass.

bitcoin wallet exploit 3

No, he is not buying new rigs/hardware with that money.

steal bitcoin wallet 4

Finally, Brady decides to shut him up. Had he transferred any bitcoins to this newly created wallet, the scammer would have immediately restored the wallet at his end using the backup phrase and drain all his money.

hack bitcoin wallet 5

Bitcoin hackers or scammers are constantly looking out for their preys in social media groups dedicated to cryptocurrencies. Its high time for anyone who dabbles into the crypto world to know these kinds of scams and Ponzi schemes beforehand.

We are often far too preoccupied with our own stuff to pay heed to a lot of such scams that are affecting our friends and family. Make sure you share this post with them.