According to a blog posted on Dec. 23, the cybersecurity company Kaspersky has revealed malicious actors are using seed phrases in a scam to trick unsuspecting cryptocurrency users.
This sophisticated scheme preys on individuals’ curiosity and dishonesty, leading to financial losses for unsuspecting victims.
What is the scam?
The scammers pretending to be inexperienced individuals seeking online help via platforms such as YouTube, manipulate seed phrases crucial for regaining access to crypto-wallets.
The fraudsters use these platforms to post fake seed phrases that entice people into opening wallets with a high value. Upon accessing these wallets, users find large amounts of stablecoins like Tether’s USDT, creating the illusion of an easy profit.
However, withdrawing these funds requires gas fees, usually paid in Tron’s TRX. Intentionally, the wallet does not contain enough TRX to allow users to make their transaction.
After the money is sent, it’s immediately transferred to an account controlled by scammers.
In the meantime, the configuration of the wallet is key. Scammers set up a wallet that requires multiple signatures to approve any transactions. It is impossible for the user to withdraw the USDT even if they have paid the gas fee.
Losses of $2 Billion
The scheme of the seed phrase is part a larger wave of crypto-scams which has exploded in 2024.
Cyvers, a blockchain-based security company, reports that crypto fraud losses have exceeded $2.3 billion in this year. This is a substantial increase over previous years. It is still 37% less than the $3 billion in 2022.
It was noted by the company that different attacks are used, with access control breaches emerging as the greatest threat. $1.9 billion of losses were incurred from 67 incidents. Following closely behind are smart contracts exploits, which resulted in 98 separate attacks resulting to a total of $456.3 Million.
Cyvers also noted that the pig butchering fraud has become one of the most common scams this year. These scams are a result of fraudsters building trust over time with their victims, usually through text messages or dating apps, before they convince them to invest money in phony crypto projects.
In 2024 the firm reported that over $3.6 billion was stolen from victims across 150,000 different addresses, and there were 800,000 transactions. This shows how sophisticated and large these scams are.
This post is in the following categories: Hacks, Scams The Author 
Oluwapelumi Adejumo
Oluwapelumi believes in the potential of Bitcoin. He gives insights into a variety of topics, including DeFi hacks, culture and mining, while demonstrating the power to transform.
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Assad Jafri
AJ has been a journalist for more than a decade, and he’s continually improved his craft. He is a Yemeni native who was inspired by the Arab Spring of 2011. He specializes in financial reporting and now concentrates on cryptocurrency.
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