FBI Warns Crypto Owners Not to Fall for ‘Liquidity Mining Scam’ – Featured Bitcoin News

The Federal Bureau of Investigation (FBI) has warned crypto investors about a scam using an investment strategy called liquidity mining. “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

The Federal Bureau of Investigation (FBI) issued an investor alert Thursday warning crypto owners of a scam targeting them. The law enforcement agency announced:

The FBI is issuing this public service announcement to warn American citizens about a cryptocurrency scam using an investment strategy called Liquidity Mining in which scammers exploit owners of cryptocurrency, typically tether (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.

Victims of a liquidity mining scam move cryptocurrency from their wallets to the liquidity mining platform, the FBI detailed. After investing, they often see the purported returns on a falsified dashboard. Believing their investments to be a success, they purchase additional cryptocurrency. Scammers ultimately move all stored cryptocurrency and investments made to a wallet they control.

The FBI noted:

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.

What do you think about the liquidity mining scam targeting crypto owners? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.