- Known as ‘crypto-dusting’, this fraud puts legitimate users in the midst of criminal activities.
- Experts say this crypto-dusting fraud is used to hide money-laundering activities.
The next time a fraction of a bitcoin pops up in your cryptocurrency wallet from an unknown source, don't get excited. It could turn out to be a part of some nefarious activity going on behind the scenes.
The fraud reportedly originates from a cryptocurrency 'mixer' called Bestmixer which specializes in providing anonymous cryptocurrency transactions. Malicious elements are believed to be freely dispensing cryptocurrencies such as bitcoin to unwary users and making them part of a potential money-laundering scheme.
Loss of Anonymity
Generally, ardent crypto enthusiasts prefer to stay anonymous for their cryptocurrency transactions. Moreover, sites which provide ‘coin mixing’ services are attractive for those who want to avoid recording their transactions on a public ledger. This applies to legitimate users who want to maintain their privacy and also those who commit illicit activities.
Attackers bank on these needs of the users to concoct new attacks targeting their transactions. Sending free cryptocurrency tokens to users is one such example of a larger scheme.
Dave Jevans, CEO of CipherTrace and chairman of the Anti-Phishing Working Group told Dark Reading, "They are (attackers) just putting it in your crypto wallet. When they do a run, they look at the last 75,000 addresses and send to them. When you open up your wallet, it's there."
However, such a freebie might prove to be risky for the recipient. Jevans explains, "You have engaged in a transaction with a known money-laundering service, so it will raise the risk on your accounts for any exchange that has implemented anti-money laundering protocols."
Moreover, when thousands of such legitimate accounts are tainted by dubious transactions, it creates a defense for illicit actors to evade the algorithms deployed by regulatory bodies. The regulatory bodies may need to change their strategy to block this kind of tactics used by money launderers.
Legitimate crypto users can take certain steps to avoid any risk from such activities by blocking such transactions. "On the consumer side, when you receive money like this — a small amount from an unknown source — the best thing to do is go in and block it from being sent. If you ever spend it, it will wreak havoc with your privacy, " Jevans added.
For large organizations dealing in cryptocurrency, it is advisable to work with vendors and partners on anti-money laundering efforts to avoid risking business operations due to such frauds.
Earlier in 2018, crypto-dusting was thought to be a flash in the pan. However, the recurring attacks indicate that threat actors are leveraging this technique to conduct more attacks on legitimate cryptocurrency users.