Cryptocurrency scams are on the rise as criminals wake up to the jackpots offered by individuals who have little understanding of how to keep themselves safe online. In the latter case, police in Hamilton, Ontario, say two teenage boys stole $4 million in cryptocurrency from an American man by impersonating support staff at a major crypto exchange.

According to CBC a reportPolice say the two young men used the internet aliases “Felon” and “Gaze” and scammed the man out of large amounts of Bitcoin and Ethereum, the two most popular cryptocurrencies. The pair achieved this by impersonating the support team from Coinbase, the second largest crypto exchange in the world.

Spear phishing attacks target specific individuals

Such scams are very common and there is even a term for them. Spear phishing is a targeted form of cyberattack where attackers impersonate trusted individuals or organizations to trick specific individuals.

Scam differs from regular “phishing” which sends many malicious messages to many potential victims. Spear-phishing is often more successful because it relies on bad actors to learn more about their victims.

The victim here likely had a custodial account with Coinbase, which means the exchange eventually gained access to his crypto funds. Committing to an authentic-looking email asking to share account details would be all that was needed to steal the money.

Spear phishing scams like this lead crypto users to choose non-prudential wallets due to security concerns. However, it is still important to remember that no matter what your wallet, you should never share your private keys.

The need for more interagency collaboration on this issue is clear. Police Chief Krista Lee Ernst told CBC that the local force had only been working with its US counterparts since June 2023.

More than a third of Canadian cryptocurrency traders have been exposed to cryptocurrency scam

The story comes just a month after BeInCrypto reported the alarming levels of crypto crime in Canada. According to a recent survey, more than a third of Canadian cryptocurrency traders have fallen victim to a scam.

Targeting individuals is often an easier win for criminals than hitting cash pools or bridges across chains. In these cases, scammers are able to exploit human weaknesses such as trust and poor security knowledge.

Last week, BeInCrypto reported how a Boston man lost $300,000 in a “pig slaughter” robbery. A type of fraud where the thief builds a relationship with the victim before choosing the right moment to strike.

However, the difference in the money taken out can be stark. Cross-chain bridging attacks, which exploit a mechanism that allows blockchain networks to communicate, can make hundreds of millions in a single exploit. While ordinary traders rarely keep these amounts in one portfolio.