Think you’re safe on Coinbase or Gemini? Scammers want you to believe that.
Crypto traders are facing a dangerous new scam, wherein fraudsters impersonate leading Coinbase and Gemini—two of the leading cryptocurrency exchanges in the world. With their near-perfect impersonation tactics, even experienced traders get caught in a trap, ultimately losing their funds in minutes.
As such, developing scams lurk around the market, so it’s crucial to know how to identify and avoid them before it’s too late.
In this TRU Insight, we’ll break down the Coinbase and Gemini impersonation development and walk you through the best practices to ensure your protection during these times.
Overview of Impersonating Scams in the Crypto Scene
People are becoming more and more aware of scams lurking around the financial markets. Through the anonymity brought by the internet, fraudsters found more sophisticated entry points to further defraud investors.
One particularly insidious scam in the crypto space is impersonation fraud. This scheme involves scammers posing as reputable figures, trusted platforms, or well-known companies to deceive investors.
By creating fake social media accounts, websites, or even deepfake videos, these fraudsters fabricate an illusion of credibility to lure victims into fraudulent investments, phishing traps, or fake giveaways.
Impersonation scams often thrive on urgency and emotional manipulation by pressuring victims to act quickly before verifying the legitimacy of the shared information.
What Is Coinbase?
Founded in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase is one of the largest and most popular cryptocurrency exchanges globally.
This US-based crypto exchange is popular for its user-friendly interface to cater to the growing interest in and user base of the crypto market.
However, its intuitive platform doesn’t mean it lacks advanced tools and features for more experienced traders. Coinbase Pro was designed to provide an advanced interface with additional trading features and lower fees.
Regarding security, the exchange is regulated in multiple jurisdictions and provides a secure environment for trading. This includes security features like two-factor authentication (2FA) and insurance for digital assets stored on its platform.
These features ultimately played vital roles in the reputation of Coinbase.
What Is Gemini?
Gemini is a US-based crypto exchange platform known for its advanced security and strict regulatory compliance. Its efforts to ensure regulatory compliance were evident as it’s the first-ever exchange to obtain a New York State BitLicense.
Additionally, the platform is designed with both beginners and experienced traders in mind. It features an intuitive interface to cater to beginner users as well as more advanced trading tools for professionals.
Gemini also offers services such as Gemini Earn (which allows users to earn interest on their crypto holdings), a secure mobile app, and Gemini Pay (enabling payments at retail stores using cryptocurrency).
How Did the Scam Work?
The Coinbase and Gemini impersonators saw success with their fraudulent schemes by phishing information from unsuspecting investors, accessing investors’ crypto wallets, and, ultimately, stealing their funds.
Here’s a detailed look at how the scam developed and defrauded investors.
Investors Received Phishing Emails
Scammers sent emails that appeared to be from Coinbase or Gemini. This email urged users to move their wallets to the companies’ respective platforms as they face lawsuits.
According to the fake email, doing so would protect their crypto holdings in case the lawsuit goes against them.
Fake Legal Threats
The email included a fake legal announcement from the companies, notably claiming that they’re changing their respective operating structure due to class-action lawsuits from regulators. Unsurprisingly, this claim was only a made-believe announcement to gain access to victims’ wallets.
But how would the process go? According to the phishing email, the user must move to the Coinbase wallet by downloading the legit Coinbase application.
At first glance, there’s nothing wrong with that. However, the scam took place when the email provided pre-generate recovery phrases.
Pre-generated Recovery Phases
A recovery phrase is a set of words generated by the cryptocurrency wallet that allows you to recover your wallet and access your funds if you lose your device or forget your password.
If someone else gains access to your recovery phrase, they can control your wallet and steal your funds.
In the case of Coinbase and Gemini impersonation schemes, the phishing email added a step of producing a pre-generated recovery phrase. The moment this phrase was used, the scammer gained full access to their wallets.
Coinbase and Gemini Issued Public Warnings
In response to a recent wave of impersonation scams, Coinbase and Gemini have warned their users about the development of phishing and impersonation schemes.
According to the exchanges, “We will never send you a recovery phase, and you should never enter a recovery phrase given to you by someone else.”
The exchanges further advise the clients to always verify communication through their official website. In case of any incident, the investor should promptly report any suspicious emails and messages to the exchange’s support team.
Conclusion
The rise of impersonation scams targeting major cryptocurrency exchanges like Coinbase and Gemini highlights the increasing sophistication of fraudsters in the crypto space.
As scammers continue to exploit trust and manipulate emotions, it’s crucial for all crypto users—whether beginners or seasoned traders—to stay vigilant and informed.
Protecting your crypto assets starts with knowledge and cautious action. Stay alert, secure your accounts, and ensure that you are always one step ahead of fraudsters.
