Cardano Anti-Fraud Guide V2

The Cardano Times
11 min readSep 3, 2022

The Ultimate Guide To Deter Scams in Cardano

Anti-Fraud Guide

Deterring Fraud In Cardano With Education

The Crypto, NFT, and Metaverse spaces as a whole have been bombarded with an onslaught of con artists looking to defraud hard-working and more importantly good people pursuing a better life for themselves in an already highly volatile market. From breaches draining entire wallets in the span of a few minutes to something as simple as staff impersonation scams; there are ultimately little to no resources to allow users to educate themselves on how to stay safe, especially when engaging in peer-to-peer transactions or conversations.

As the founder of a project dedicated to deterring fraudsters in the Metaverse; our firm is entirely aware that ultimately the only individual who can stop scams are those being confronted with one. We believe that with the proper guidance and resources; we can make this community and these industries so much safer. In this documentation; we hope to highlight the main avenues and techniques con artists pursue to steal from innocent bystanders, and more importantly educate users on the steps to take to avoid being defrauded or conned.

General Rules To Follow

Protecting Your Seed Phrase

The recovery seed phrase to your wallets is one of the most important pieces of information for sustaining ownership of your assets. Don’t ever let anyone see it or share it with anyone in any scenario whatsoever, or store it online in for example notepad applications or on your computer’s hard drive. It’s also advised to use hardware wallets like Ledger or store your recovery seed phrase on paper and store it securely. Never allow anyone or any entity to have access to your seed phrase ever.

Following Project Announcements

When looking for announcements for projects whether it’s during mints, critical announcements, or any type of scenario; make sure to only look for notifications through the project’s official Discord Server or their official Twitter page. If you ever encounter a direct message claiming to be sharing news for a project, it is most definitively fraudulent.

Using Secondary Marketplaces and Escrow Services

When looking to purchase, sell, or trade assets in the CNFT space; never engage with Over-The-Counter (OTC) trades; meaning you engage in a transaction without using secondary marketplaces like Jpg.Store or escrow services like Trading Tent, this is generally unwise even if you are engaging in a transaction with someone you know and trust. Always using secondary marketplaces or escrow services is the most secure way to stay safe and engage in the CNFT space.

Connecting To Decentralized-Applications (D-Apps)

When connecting your wallet to decentralized applications whether they are secondary marketplaces like Jpg.store, escrow services like Trading Tent, or even DeFi protocols like Lending Pond; make sure the application you are connecting to is a trust application. Connecting to these platforms or signing transactions to enter their platform can sometimes be extremely dangerous especially if the application is simply a link impersonating more known applications. Always stay safe when connecting your wallet to D-Apps.

Verifying Discord Usernames/Twitter Handles

Another general rule to follow to maintain the security of your assets and engage in transactions securely is by making sure the Discord Username/Twitter Handle actually matches the person you are talking to. For example; if you are talking to Pavia Lee from the Pavia discord, make sure the username in direct messages matches the username in the Pavia discord. Another example is verifying you are following the authentic Charles Hoskinson versus the plethora of fraudulent bot accounts attempting to impersonate him.

Scam/Fraud Methods On Discord

Fraudulent Trading Tent Links

One of the growingly popular scam techniques plaguing the Cardano Community is the new method of posting fraudulent links for the popular escrow service; Trading Tent, draining wallets entirely; stealing all assets within. The con artist will first attempt to direct message you interested in purchasing an NFT you have listed somewhere on a Discord Server, asking you to purchase the asset for exactly what you listed it at or even above the price you’ve listed it for.

Fraudulent Trading Tent Link Example

If they proceed with the scam; they will then post a fraudulent link claiming to be for the official Trading Tent escrow service, as shown above. The official Trading Tent link is https://tradingtent.io and any other link claiming to be the official site is nothing more than a fraud. These links will drain wallets leaving innocent sellers destroyed financially and emotionally. Please be aware of this new scam, and always remember to stay safe.

Counterfeit Assets on Secondary Marketplaces

Another common tactic that scammers have been using since the inception of Cardano NFT’s is the minting and selling of counterfeit assets impersonating expensive and larger projects in hopes of turning a quick profit. This scam has been slowly decreasing overtime, but it still remains to be a prevalent scam conning thousands of ADA out of innocent buyers each and every month.

Specifically, on secondary marketplaces like CNFT.io, you can determine if an asset is legitimate or not through a number of methods. The first and easiest method is to look for the verified star icon shown on the asset on the right. The second method is through verifying the price of said asset is above or equal to the floor price of the project you are buying from. As shown on the asset on the left, you can see this plot has a price of 60 ADA; although the floor price of Pavia plots is well over 150 ADA. The third and most conclusive method is verifying the policy ID of an asset to the project it’s allegedly tied to. If the policy ID of the asset doesn’t match the policy ID of the project; it is simply nothing more than a fraud.

Staff Impersonation/Over-The-Counter (OTC) Escrow

This scam is a bit more complex and has grown in popularity among fraudsters due to its effectiveness at getting innocent bystanders to trust the con; utilizing two people or two discord accounts to first engage as a regular individual looking to buy a property, but then when they go to purchase on a secondary marketplace, they say they seem to be encountering issues with their purchase or an error has occurred at the fault of the secondary marketplace you’ve listed on. This “regular individual” will then say he/she wishes to buy the property, but it won’t allow them to purchase on the secondary marketplace. After a few minutes of back and forth, the individual will then suggest getting a moderator from the Discord Server of the project your asset is from to have their Staff conduct an escrow acting as a middleman. They will then inform you a moderator or staff member has direct messaged them and offered their services to conduct an OTC escrow, but unfortunately this “moderator and/or staff member” is nothing more than a con artist impersonating staff in hopes of you letting your guard down.

A fraudulent buyer and moderator pretend to discuss troubleshooting

They then will invite you to a group chat; with the buyer and the alleged staff member, trying to troubleshoot issues for the buyer at first then offering to conduct an escrow. If you encounter this situation, please be advised this is nothing more than an attempt to defraud you. Staff members or moderators will not direct message you to conduct escrow services, and will certainly not make group chats to do just that.

Another tactic utilizing staff impersonation is where they will simply impersonate a staff member from a project and direct message you directly if you have recently made a public support request in that Discord Server.

This is another common method of impersonating staff to attempt to defraud you in some capacity; if the Discord Server or Project you are in has a public support feature, it is highly irregular to see staff then direct messaging you as a result of making a public support request. Please stay safe and always make sure the staff you are talking to align with the usernames of official staff members in their discord server. Some will be as blatantly obvious they are cons like the one above or they will try to impersonate staff properly like the image below.

Wallet Verification/Troubleshooting Scam

Another new scam tactic that has grown in popularity as well is individuals reaching out to innocent bystanders through direct messages posing to offer support due to an error/failure you have in your wallet due to some sort of update you need to add or verification you have yet to complete.

These con artists claim to be experienced developers, coders, programmers, etc that are reaching out to you randomly after miraculously discovering your wallet of all wallets had some sort of issue. This allegedly kind-hearted gesture is nothing more than a ploy to direct you to a website or application where you will then sign a transaction that will drain your wallet entirely stealing everything you possess within it.

In this example; the individual who first approached the innocent bystander than brought another member posing as Virtua staff, who will then direct you to head on over to an external link and scam you out of everything you have.

This fraudulent method is a combination of the scams that have been prevalent in our community for quite some time, and is seemingly on the rise due its effectiveness.

Fraudulent Project Impersonation Scam

Another scam that is on the rise in regards to scamming individuals by draining their wallets is con artists creating discord accounts impersonating known projects in and outside the Cardano ecosystem.

As shown in the image above, users will impersonate projects and send an aesthetically pleasing message claiming you have won giveaways with insane rewards like in this case 0.5–7 ETH by visiting an external link that drains your wallet or possibly worse. This is the first and most notorious use of impersonating projects as giving our rewards this size is appealing to anyone who sees this. Sadly in this space; far too often we see people falling victim to thinking they will be rewarded immensely, and it’s a good rule to follow that if it sounds too good to be true it most likely is.

Another utilization of impersonating projects is direct messages from technological projects, Cardano wallets, Decentralized applications, etc; all claiming you have some sort of critical issue that needs repair. They will then ask you to visit an external link that is impersonating the project and is nothing more than a scam to drain your wallet completely.

Scam/Fraud Methods On Twitter

MEV Trading Bot Scam

An extremely common scam prevalent on Twitter is the MEV Trading Bot Scam, a scam commonly utilized by con artists where they use Twitter Bots to reply to thousands of posts linking a Youtube Channel, drainer link, and/or course promising users who come across the reply the ability to make massive profits with no effort whatsoever.

These scams claim to provide users the ability to make significant amounts of passive income through a “Mev Ethereum Bot” that will front-run transactions on exchanges like Uniswap skimming profits from transactions other users make on the open market.

To put it simply, these bots do not work and they are often falsely advertising this passive income opportunity to lure you to some website that will drain your wallet or make you purchase an expensive useless course. Do not interact with these replies whatsoever, and make sure to block those accounts each and every time you see them.

Fake Airdrop Drainer Link

Another extremely common scam utilized by fraudsters it the fake airdrop link that drains users’ wallets who interact with the site or connect their wallets. Con artists use thousands of Twitter bots in a similar fashion as the MEV Bot scam mentioned before, posting links on the Twitter account’s direct feed and replying to a multitude of people’s posts in the hopes they can convince one or two people to interact with the malicious link.

These websites often ask you to connect your wallet and/or sign a transaction, which instantly drains your wallet of everything it has; however, some of these scams reportedly have drained wallets simply by the user interacting with the website. With this in mind, it is extremely advised to completely ignore and evade such posts and links as 99% of the time they are absolutely fraudulent and will cost you immensely.

Airdrop claims should always be visited by the official teams and confirmed by the project’s official announcement channels or mediums of communication. Typically if it sounds too good to be true or is unverifiable by the project/token it refers to, it is best to not interact whatsoever.

Influencers Shilling Sh#tcoins & Rugpulls

Another common and unfortunate scam utilized by con artists is the freelance hiring of “crypto influencers” who amassed thousands of followers on Twitter or other social media platforms, with the ultimate goal of having them collectively promote a horrible cryptocurrency, NFT project, or memecoin that will ultimately pull the rug on its investors.

These con artists build up immense amounts of hype through this massive social media campaign before their mint or token launch, then typically abandon the project with the profits; leaving investors out of hundreds of thousands if not millions of dollars per fraudulent scheme.

As a general rule of thumb, it is truly important for users to ignore the financial advice or promotions influencers on Twitter provide on their feeds as they are often compensated for their promotion of the projects they specifically talk about. Always conduct your own research, and make investment decisions based on your own due diligence rather than the words of advice from ignorant paid shills on social media.

Conclusion

While it’s unfortunate that scammers employ various tactics to deceive people and extort millions of dollars monthly, we possess the power to resist these ethically bankrupt individuals. By acquiring knowledge about evasion techniques, we can shield ourselves from falling victim once more.

Furthermore, we have the capacity to disseminate this valuable information and educational materials to others, thus preventing anyone else from becoming a target. While eradicating scammers from Cardano might be challenging, we can empower the community with safety awareness to ensure these fraudsters never succeed in deceiving unsuspecting individuals again.

--

--

The Cardano Times

Keeping you informed of the Cardano Ecosystem one article and podcast at a time. Education is a right, not a privilege. Twitter: @TheCardanoTimes