Nigeria has suffered significant financial losses due to cryptocurrency scams, amounting to $8 million within the last six months.
This alarming figure comes amid a global surge in crypto-related crimes, with investors worldwide losing $664 million to hackers in the first half of the year, according to data from DeFiLlama.
DeFiLlama, a leading aggregator for decentralized finance, reported that the bulk of these losses stemmed from phishing attacks and compromised private keys.
The data highlighted the sophistication of these crypto hackers, many of whom are linked to organized cybercrime syndicates such as North Korea’s state-sponsored Lazarus Group, known for stealing billions in crypto assets.
High-powered hacking tools, often beyond the reach of amateur hackers, are commonly used in these attacks.
However, experts are increasingly concerned about the threat posed by open-source infostealers, malicious software designed to extract sensitive financial information from victims’ computers.
These infostealers target crypto wallet passwords, private keys, and other crucial data, leading to significant breaches such as the $305 million theft from the DMM Bitcoin exchange earlier this year.
Adewale Kayode, a blockchain expert and Team Lead at SIRFITECH, told The PUNCH that Nigeria has become a hub for cryptocurrency scams.
The country ranks second globally in crypto adoption, trailing only India.
Kayode attributed this high adoption rate to the economic hardship faced by many Nigerians, who turn to cryptocurrency as an alternative means to supplement their income.
Unfortunately, this environment has also provided fertile ground for scammers.
“Scammers are exploiting the high adoption rate of cryptocurrency in Nigeria, leading to substantial financial losses,” Kayode explained.
“Over the past six months, Nigeria alone has lost $8 million to crypto scams.”
Globally, crypto scams have evolved to become increasingly sophisticated. Fraudsters employ a variety of tactics, including multi-level marketing scams, Ponzi schemes, fake ICOs, and phishing attacks, to dupe unsuspecting victims.
Kayode warned that scammers continually innovate, using methods like replacement-by-fee attacks to evade detection.
The IT expert stressed the urgent need for regulatory measures to combat the rising trend of crypto scams.
“Regulation is crucial to protecting individuals and ensuring the integrity of the cryptocurrency market,” he emphasized.
A recent report by Proofpoint researchers, titled “How Cyber Criminals Target Cryptocurrency,” underscored the diverse tactics used by cybercriminals to target cryptocurrency.
The report identified two primary objectives: traditional fraud, such as business email compromise attacks, and targeting decentralized finance (DeFi) organizations to compromise cryptocurrency storage and transactions.
“Most attacks require a basic understanding of how cryptocurrency transfers and wallets function, but they do not require sophisticated tooling to find success,” the researchers noted.
As Nigeria continues to grapple with the economic challenges driving its high rate of crypto adoption, the need for robust regulatory frameworks and heightened public awareness has never been more critical to mitigate the risks posed by these increasingly sophisticated scams.