What is Social Engineering in the Crypto Space

Introduction

According to CertiK, a blockchain and smart contract verification platform, phishing attacks surged by 170 percent in the second quarter of 2022, as highlighted in their quarterly report. Also, Cisco Talos, a threat intelligence and research organization within Cisco Systems, foresees that social engineering attacks, particularly phishing, will emerge as dominant threats in Web3 and the metaverse in the upcoming years.

While the dotcom bubble gradually gained dominance, becoming one of the most widely searched events in history, social engineering in the crypto space is gradually having its fame on the rise with daily increasing concerns of victims from scams and phishing schemes, which has left many in a wrecked and confused state. With the growing adoption of crypto, NFTs, and Web3 technologies, the occurrence of scams in these domains is also on the rise.

As funny as it seems, innovation has gradually gone beyond the walls of refining some processes; it can also be seen in how new schemes are constantly revised and devised to scam many people. Fascinatingly, a handful of Web3 users still fall prey because it’s always difficult to spot or sense when scams come around. Statistics have shown that many people were ignorant of some scam acts until they were neck deep.

Innovation and Unpredictable Trends in Social Engineering

Malicious actors continuously devise new methods to deceive users into surrendering their cryptocurrency holdings, NFTs, or confidential login credentials, with phishing being a prevalent form of social engineering attack.

Social engineering is a pervasive element in nearly every cybersecurity attack, weaving through various forms, such as classic email and virus scams infused with social overtones. Its impact extends beyond desktop devices to digital realms, posing threats through mobile attacks. Notably, the reach of social engineering doesn’t confine itself to the digital sphere, as it can manifest in person, presenting a versatile threat landscape.

The extent of social engineering damage cannot be fully covered and accounted for because of its broad reach. Researchers in the field of cybersecurity have uncovered a myriad of 57 distinct ways in which cyber-attacks can adversely affect individuals, businesses, and even entire nations. These impacts span a wide spectrum, encompassing threats to life, inducing mental health challenges such as depression, incurring regulatory fines, and disrupting routine daily activities.

Principally, it is a manipulative strategy that capitalizes on human mistakes to acquire private information, unauthorized access, or valuable assets. Worth noting is the fact that these scams are intricately designed around the understanding of human thought processes and behaviors, making them particularly effective in manipulating users. By comprehending the motivations guiding a user’s actions, attackers can skillfully deceive and influence them.

Types of Social Engineering Attacks

Source: Office 1.com

Phishing Attacks

One of the favorite moves of social engineering criminals has always been Phishing Attacks. These attackers pretend to be from your bank or crypto exchange or even a friend while trying to get you to reveal your passwords or private details.

• Spam Phishing: This is like a fishing net cast wide, trying to catch anyone. It’s not personal; it just hopes someone takes the bait.
• Spear Phishing and Whaling: These are more targeted. They use specific details about you, like your name, to trick you. Whaling is like aiming for big fish, like famous people or top officials.

Now, how do they deliver these tricks?

• Voice Phishing (Vishing): They might call you, either with a recorded message or a real person, making you trust them and act quickly
• SMS Phishing (Smishing): You get a text with a link or a message asking you to reply urgently. It might lead you to a fake website or a fraud email or phone number
• Email Phishing: This is the classic one. You get an email that tricks you into clicking a link or opening something bad
• Angler Phishing: On social media, they might pretend to be customer service, hijacking your conversation into private messages
• Search Engine Phishing: They manipulate search results, so you end up on a fake website instead of the real one
• URL Phishing Links: These tricky links show up in emails, texts, or social media, trying to lure you to fake websites
• In-Session Phishing: This happens while you’re browsing the internet, with fake pop-ups asking for your login details

Other types of social engineering include:

Baiting Attacks

Baiting tricks you by using your natural curiosity to lure you into exposing yourself to an attacker. They often promise something free or exclusive to exploit you, usually involving infecting your device with malware. Common methods include leaving USB drives in public spaces or sending email attachments with offers for freebies or fake software.

Physical Breach Attacks

These involve attackers showing up in person, pretending to be someone legitimate to gain access to restricted areas or information. It’s more common in big organizations. Attackers might pretend to be a trusted vendor or even a former employee. It’s risky, but if successful, the reward is high.

Pretexting Attacks

Pretexting uses a fake identity to establish trust, like impersonating a vendor or an employee. The attacker actively interacts with you and can exploit your wallet once they convince you they’re legit.

Access Tailgating Attacks

Tailgating, or piggybacking, is when someone follows an authorized person into a restricted area. They might rely on your courtesy to hold the door or convince you they’re allowed in. Pretexting can also play a role here.

Quid Pro Quo Attacks

This involves exchanging your info for a reward or compensation. They might offer giveaways or research studies to get your data, promising something valuable. Alas, they just take your data without giving you anything.

Scareware Attacks

In scareware attacks, malware frightens you into taking action by showing fake warnings of malware infections or compromised accounts. It pushes you to buy phony cybersecurity software that could reveal your private details.

Examples of Social Engineering Attacks

Highlighting these examples could also serve as the highlight of this article to enable readers to take more precautionary steps when confronted with situations like this.

The following are examples of social engineering attacks:

Worm Attacks

Cybercriminals grab attention by enticing users to click on infected links or files. Examples include the LoveLetter worm in 2000, the Mydoom email worm in 2004, and the Swen worm posing as a Microsoft message offering a fake security patch.

Malware Link Delivery Channels

Relating to malware, the infected links can be sent through email, instant messaging, or internet chat rooms. Mobile viruses may be delivered via SMS messages. Note that these messages usually use intriguing words to lure users into clicking, bypassing Email antivirus filters.

Peer-to-Peer (P2P) Network Attacks

In P2P networks, they are exploited to distribute malware with enticing names. Files like “AIM & AOL Password Hacker.exe” or “Playstation emulator crack.exe” attract users to download and launch them.

Shaming Infected Users

Malware creators manipulate victims by offering fake utilities or guides promising illegal benefits, like free internet access or a credit card number generator. Victims, not wanting to reveal their illegal actions, often avoid reporting the infection.

How Does Social Engineering Work?

Source: Imperva, Inc.

Social engineering attacks predominantly hinge on genuine communication between perpetrators and targets. Rather than relying on forceful methods to breach data, attackers typically aim to manipulate users into compromising their own security.

The social engineering attack cycle follows a systematic process employed by these criminals to deceive individuals effectively. The key steps in this cycle are as follows:

• Social engineering attacks typically unfold in a series of steps. The malicious actor initiates the process by delving into the potential victim’s background, aiming to gather crucial information like weak security practices or vulnerable entry points.
• Once armed with sufficient details, the perpetrator establishes trust with the victim, employing various tactics. Social engineering encompasses methods such as creating false urgency, posing as an authority figure, or dangling enticing rewards.
• Afterward, they disengage, which means they withdraw after the user has taken the desired action.

This manipulation often relies on the art of persuasion, where attackers use psychological tactics to exploit human behavior. By understanding these tactics, individuals can better recognize and resist potential social engineering attempts, contributing to a more secure digital environment. So stay informed, stay vigilant, and prioritize online safety!

Social Engineering in Web 3.0

Source: Systango

The Web 3.0 space has been a significant campground for many malicious social engineering activities lately. In the realm of cryptocurrency, hackers often employ social engineering tactics to gain unauthorized access to crypto wallets or accounts. The digital assets of crypto users, stored in wallets with confidential private keys, become prime targets for social engineering scams due to their sensitive nature.

Instead of relying on brute force to breach security and steal crypto assets, perpetrators utilize various techniques to exploit human vulnerabilities. For instance, attackers may deploy schemes to deceive users into disclosing private keys through seemingly innocent methods, such as phishing emails. Imagine receiving an email that appears to be from your wallet service or support team, but in reality, it’s a phishing attempt aiming to trick you into revealing crucial information.

For example, a picture of an attempted social engineering process on X (formerly Twitter) is below. To say the least, X can be referenced as a global product with strong firewalls and protections, but sadly, social engineering knows no bounds as these criminals keep devising innovative and more advanced models to crack through any uptight wall or person/organization they wish to access.

Source: X Support

Another tweet was spotted on X on July 15, 2020, from a user with the handle ‘@lopp.’ The artistic work of the social engineering guys seems to be familiar to him, as his tweets show some level of experience.

Source: Jameson Loop on X

To safeguard your crypto holdings, it’s crucial to stay vigilant against such deceptive tactics. Be cautious of unexpected emails or messages, verify the authenticity of communication, and never share private keys with unknown sources. Another tweet on February 13, 2022, shows another far cry from similar activities.

Source: Thomasg.eth on X

Furthermore, in September 2023, the decentralized protocol Balancer, which operates on the Ethereum blockchain, reported a security incident involving a social engineering attack. The platform regained control of its domain but cautioned users about a potential threat from an unauthorized website. Balancer urged users to remain vigilant and stay aware of the risks associated with the incident.

Source: Balancer on X

Traits of Social Engineering Attacks

Social engineering attacks revolve around the perpetrator’s adept use of persuasion and confidence, inducing individuals to take actions they wouldn’t typically consider.

In the face of these tactics, individuals often find themselves succumbing to the following deceptive behaviors:

• Heightened Emotions: Emotional manipulation is a powerful tool, exploiting individuals in an elevated emotional state. People are more prone to making irrational or risky decisions when experiencing heightened emotions. Tactics include instigating fear, excitement, curiosity, anger, guilt, or sadness.
• Urgency: Time-sensitive appeals or requests represent a reliable strategy for attackers. Creating a sense of urgency, attackers may present a purportedly urgent problem that demands immediate attention or offer a time-limited prize or reward. These tactics are designed to override critical thinking abilities.
• Trust: Establishing believability is paramount in social engineering attacks. Confidence is a key element, as attackers fabricate a narrative backed by sufficient research on the target to make it easily believable and unlikely to raise suspicion.

How to Identify Social Engineering Attacks

Source: Xiph Cyber

Defending against social engineering starts with self-awareness. Take a moment to think before responding or taking action, as attackers rely on quick reactions. Here are some questions to consider if you suspect a social engineering attack:

• Check Your Emotions: Are your emotions heightened? You might be more susceptible if you feel unusually curious, fearful, or excited. Elevated emotions can cloud judgment, making it crucial to recognize these red flags.
• Verify Message Senders: Did the message come from a legitimate sender? Scrutinize Email addresses and social media profiles for subtle differences, like misspelled names. If possible, verify with the supposed sender through other means, as fake profiles are common.
• Confirm Sender Identity: Did your friend actually send the message? Confirm with the person if they sent the message, especially if it involves sensitive information. They might be unaware of a hack or impersonation.
• Check Website Details: Does the website have odd details? Pay attention to irregularities in the URL, image quality, outdated logos, or typos on the webpage. If something feels off, leave the website immediately.
• Assess Offer Authenticity: Does the offer seem too good to be true? Be cautious of enticing offers, as they often motivate social engineering attacks. Question why someone is offering valuable items for minimal gain on their part, and stay vigilant against data harvesting.
• Scrutinize Attachments and Links: Are attachments or links that seem suspicious? If a link or file name appears unclear or out of context, reconsider the legitimacy of the entire communication. Red flags may include odd timing, an unusual context, or other suspicious elements.
• Demand Identity Verification: Can the person prove their identity? If someone requests access, especially in person, insist on identity verification. Ensure they can prove their affiliation with the claimed organization, whether online or face-to-face, to prevent falling victim to physical breaches.

Conclusion

The ever-evolving landscape of social engineering attacks demands constant vigilance from Web3 users. While innovation has revolutionized our lives, it has also become a double-edged sword, empowering both progress and malicious actors. As the responsibility for safeguarding our digital assets falls on our shoulders, taking proactive steps is crucial.

This article has equipped you with valuable knowledge to identify and combat social engineering attempts. Remember, slowing down and thinking critically before taking any action is your key defense. Implement the listed preventive measures, such as scrutinizing communication channels, implementing multi-factor authentication, fortifying passwords, and staying informed about evolving phishing techniques.

We can collectively build a more secure and responsible Web3 environment by being mindful and proactive. Remember, the onus lies on each individual to protect themselves and their digital assets. So stay vigilant, stay informed, and stay safe!