Federal Bureau of Investigation has warned cryptocurrency investors that a fraud using a strategy known as liquidity mining could be enticing. “This scam has been responsible for over $70 million in combined victim losses,” said the law enforcement agency.
FBI Warns of Crypto Liquidity Mining Scam
Federal Bureau of Investigation (FBI), Thursday’s investor alert, warned crypto-owners of a scheme that could harm them. According to the law enforcement agency,
To warn Americans of a crypto scam called Liquidity Mining, the FBI has issued this public service alert. This investment strategy allows scammers to exploit holders of cryptocurrency such as ether (USDT), and/or Ethereum (ETH).
“Liquidity mining is an investment strategy used to earn passive income with cryptocurrency,” the FBI explained. “In legitimate liquidity mining operations, investors stake their cryptocurrency in a liquidity pool to provide traders with the liquidity necessary to conduct transactions. In return, the investor receives a portion of the trading fees.”
Claiming to use this investment strategy, “Scammers convince victims to link their cryptocurrency wallets to fraudulent liquidity mining applications. Scammers then wipe out the victims’ funds without notification or permission from the victim,” the FBI cautioned.
“Scammers approach potential victims through an unsolicited direct message (DM) on social media, dating applications, or messaging services such as Facebook, Instagram, Twitter, Linkedin, Whatsapp, etc.,” the announcement adds.
The FBI explained that victims of liquidity mining fraud move cryptocurrency from wallets to liquidity mining platforms. They see their investment returns displayed on a fake dashboard. In order to believe that they have made a good investment, the scammers purchase extra cryptocurrency. Scammers end up moving all cryptocurrency, investments and funds to their wallets.
According to the FBI:
Since January 2019, according to the FBI’s Internet Crime Complaint Center (IC3) and open source, this scam has been responsible for over $70 million in combined victim losses.
Let us know your thoughts on the crypto-owner liquidity mining fraud. Comment below to let us know your thoughts about the liquidity mining scam targeting crypto owners
Images CreditsShutterstock. Pixabay. Wiki Commons
DisclaimerThis article serves informational purposes. It does not constitute an offer, solicitation, or recommendation of any company, products or services. Bitcoin.com is not a provider of investment, tax, legal or accounting advice. The author and the company are not responsible for any loss or damage caused by the content or use of any goods, services, or information mentioned in the article.