In a recent development, The FBI cautions cryptocurrency investors of new fraudulent activity in the industry that uses an investment strategy called liquidity mining. According to the FBI, this scheme has made investors lose more than $70 million within a short period.
The FBI issued a fraudulent alert for Crypto Liquidity Mining
This latest alert came on Thursday as it targets crypto owners of their investment. In its statement, “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 agency explained this further: “Liquidity mining is an investment strategy used to earn passive income with cryptocurrency.” Unlike this scam, in genuine liquidity mining operations, investors invest their crypto in a liquidity pool to offer traders the liquidity required to carry out a transaction. On the other hand, they get returns or rewards for this effort, which usually come from trading fees.
Scammers entice victims to connect their crypto wallets to bogus liquidity mining software by claiming that they should utilize this investment approach. The FBI warned that scammers would subsequently steal the victims’ funds without their knowledge or consent. Remarkably, this isn’t the first time scammers have been on the rampage. Recently, an unsuspecting NFT artist lost $150K to hackers after an attack on his account.
The report also indicated that unsuspecting victims are contacted using unsolicited direct messages on dating applications, social media, or messaging services, including Twitter, Facebook, WhatsApp, Instagram, LinkedIn, etc.
According to the FBI, those who fall for a liquidity mining scam transfer crypto from their wallets to a fraudulent platform. After investing, investors are frequently surprised to see a fake dashboard with alleged returns. They buy more cryptocurrencies because they believe their investments have paid off. Scammers eventually transfer all cryptocurrencies and investments they have made to a wallet they can control.