In an interview with crypto.news, Jeff Lunglhofer – Coinbase’s chief information security officer – identified social engineering scams as the most significant threat to both novice and experienced crypto users. “Social engineering scams are by far the number one threat to crypto enthusiasts and crypto holders and investors today,” warned Lunglhofer.
Lunglhofer pointed out that these scams are not exclusive to the crypto sector. However, their prevalence has seen a noticeable uptick over the past few years. To mitigate the risks associated with these scams, Lunglhofer suggested two primary precautionary measures.
The first recommendation is to disregard any unsolicited calls claiming to represent reputable exchanges, such as Coinbase or Kraken. Rather than interacting with these dubious calls, Lunglhofer advises users to hang up and contact the company directly through their official website or channels. According to him, this simple precaution could prevent up to 80% of social engineering scams.
Secondly, understanding the difference between self-custody and exchange custody is crucial. Self-custody, like Coinbase Wallet, gives the user control over their assets. It also places the responsibility of protecting seed phrases, which should never be shared, on the user. As Lunglhofer pointed out, “you control [your wallet] – we have no control over that.”
In contrast, exchange custody involves a third-party service managing your private keys, thus securing and managing your crypto assets.
Lunglhofer also advised against sending crypto to unknown entities, highlighting the rise in romance scams where emotional connections are manipulated to defraud victims. “I feel like, particularly post-COVID, people were just lonely and were vulnerable to [romance scams], and it’s heartbreaking to see people go through that. They just want to be loved,” he lamented.
Lunglhofer also discussed the burgeoning threat of deepfake technology, which scammers leverage to impersonate leaders and deceive individuals into sending assets to fraudulent wallets. He emphasizes the importance of verifying video interactions in light of increasingly convincing AI-driven scams.
Apart from individual scam prevention strategies, Lunglhofer underscored the importance of cooperation between cryptocurrency platforms. Initiatives such as the Crypto Information Sharing and Analysis Center, where industry players share information on trends, scams, and security vulnerabilities, are crucial in bolstering the security of the entire crypto ecosystem. As a board member of Crypto ISAC, Lunglhofer believes that “what a great opportunity for crypto companies to come together to share information… share information about scams, trends that we’re seeing or vulnerabilities that might affect the broader crypto ecosystem.”
Finally, he addressed concerns about the reputation of crypto, particularly its association with illicit activities. While acknowledging that cryptocurrencies like Bitcoin (BTC) have been linked to criminal activity, Lunglhofer argues that the narrative is often exaggerated. “If you want to commit a crime and remain anonymous, the last place you’d do it is on a blockchain. The great thing about blockchain is every transaction lives forever. It’s available for analysis and perpetual review and transparency,” he concluded.
