Social engineering is one of the most dangerous threats in the crypto space. Instead of attacking networks or code, hackers manipulate people into giving up sensitive information. These attacks exploit human psychology rather than technical vulnerabilities. The goal is to gain access to wallets, private keys, or exchange accounts.
With billions flowing through the crypto industry, scammers use sophisticated tactics to deceive investors, traders, and even developers. Unlike traditional hacks, social engineering attacks leave victims feeling tricked rather than hacked.
As ZachXBT mentioned in his X post, Coinbase, one of the largest crypto companies in the world have been unable to stop over $300 million lost by users to social engineering attacks.
Types of Social Engineering Attacks
Social engineering comes in various forms, and crypto users must recognize these tactics to avoid falling victim. Here are the most common methods:
1. Phishing Attacks
Scammers send fake emails, messages, or website links that appear legitimate. These links direct users to fraudulent sites that steal login credentials or private keys.
Example: A user receives an email claiming to be from Binance, urging them to reset their password due to “suspicious activity.” Clicking the link leads to a fake Binance login page designed to steal their credentials.
Img Src: Medium
2. Impersonation Scams
Attackers pose as trusted figures, such as project founders, influencers, or customer support representatives. They contact victims through Twitter, Telegram, or Discord and convince them to send funds or share sensitive information.
Example: A scammer impersonating a project’s CEO announces an “airdrop” and asks users to connect their wallets to a malicious site.
3. Baiting and Malware Attacks
Attackers lure victims with enticing offers, such as free crypto tools or fake investment opportunities. Clicking on these links may install malware that steals private keys or records keystrokes.
Example: A trader downloads a “crypto trading bot” that secretly extracts their Metamask wallet information.
4. SIM Swapping
Hackers trick or bribe telecom employees to transfer a victim’s phone number to their own SIM card. This allows them to bypass two-factor authentication (2FA) and access exchange accounts.
Example: A hacker gains control of a victim’s phone number and resets their Coinbase password using SMS-based 2FA, draining their account.
5. Honey Traps and Social Manipulation
Some scams involve personal relationships. Attackers build trust with victims over weeks or months before exploiting them.
Example: A scammer befriends a crypto investor online, builds a rapport, then convinces them to invest in a fake project.
A social engineering hack – step by step
Let us just add the steps followed in a typical social engineering hack (credits: ZachXBT):
- The scammer called the victim from a spoofed phone number and used personal information obtained from private dbs to gain their trust. After they told the victim their account had multiple unauthorized login attempts. (Coinbase will NEVER call you).
- They then sent a spoofed email which appeared to be from Coinbase with a fake Case ID further gaining trust. They instructed the victim to transfer funds to a Coinbase Wallet and whitelist an address while “support” verified their accounts security.
- Scammers clone the Coinbase site nearly 1:1 and allow the scammers to send different prompts to the target via spoofed emails using panels. There are many Telegram channels where scammers advertise them. [See video below]
- You transfer your token and poof! Gone
Notable Attacks in 2024
1. The Fake Developer Scam on Ethereum
In early 2024, an attacker infiltrated a major Ethereum project by posing as a blockchain developer. Over several months, they gained the trust of the team. Eventually, they convinced developers to deploy a smart contract with a hidden backdoor. The result? Millions in funds were drained before the exploit was discovered.
2. The Twitter Impersonation Wave
Hackers hijacked verified Twitter accounts and impersonated major crypto exchanges and influencers. They promoted fake giveaways, asking users to “verify” their wallets by signing malicious transactions. Thousands of users lost funds, despite warnings from security experts.
How to Protect Yourself Against Social Engineering Attacks
1. Verify Before You Trust
Always double-check the authenticity of messages, emails, and links. If you receive an unexpected request from a project or influencer, confirm it through official channels.
2. Use Hardware Wallets
A hardware wallet keeps your private keys offline, making it immune to phishing and malware attacks. Even if you accidentally sign into a fake site, your keys remain safe.
3. Enable Stronger 2FA Methods
Avoid SMS-based 2FA, as it is vulnerable to SIM swapping. Use app-based authentication (Google Authenticator, Authy) or hardware security keys (YubiKey) instead.
4. Never Share Private Keys or Seed Phrases
No legitimate company or individual will ever ask for your private key or seed phrase. If someone does, they are a scammer.
5. Be Skeptical of Urgent Requests
Scammers create urgency to push victims into acting without thinking. Take your time, and if something feels rushed or too good to be true, it probably is.
6. Secure Your Online Presence
Use unique passwords for each crypto-related account and enable multi-factor authentication where possible. Limit the amount of personal information you share online.
Final Thoughts
Social engineering is one of the biggest threats in crypto because it targets human emotions rather than technology. Scammers use deception, trust, and urgency to exploit victims. Staying informed and skeptical is the best defense. Crypto security isn’t just about strong passwords or hardware wallets—it’s about developing a mindset that protects you from manipulation.
By recognizing the signs of social engineering and applying strong security measures, you can safeguard your assets and avoid falling victim to these sophisticated scams.
