Media

Sophos Lifts the Lid Off Liquidity Mining CryptoCrime

Legitimate liquidity mining makes it possible for DeFi networks to automatically process trades using digital currency such as Ethereum, the preferred cryptocurrency for liquidity mining. Smart contracts built into the DeFi network must rapidly determine the relative value of the currencies being exchanged and execute the trade. Since there is no centralized pool of cryptocurrency for these distributed exchanges to pull from to complete trades, they rely on crowdsourcing to provide the pool of cryptocurrency capital required to complete a trade — a liquidity pool.

To create the liquidity pool — which handles transactions between a single pair of cryptocurrencies, such as Ethereum and Tether — investors commit equal values of both cryptocurrencies to the pool. In exchange for lending that cryptocurrency to the pool, the investors get a reward based on a percentage of the trading fees associated with the DeFi protocol.

Investors also receive liquidity pool tokens (LP tokens) — a representation of their share of the pool. These tokens can be “staked,” or linked back to the exchange, further committing the original contribution, and earning the investor dividends in the form of another cryptocurrency associated with the DeFi project. The value of these reward tokens can vary widely.

“The mechanics of liquidity mining in its legitimate form provide the perfect cover for old fashioned swindles re-minted for the cryptocurrency age,” said Gallagher. “Criminal liquidity mining schemes, like traditional Ponzi schemes, give targets the illusion that they can pull their money out at any time — even allowing them to make withdrawals early on. But scammers will continuously urge targets to keep investing and to ‘invest big’ by obscuring what’s really happening with fake applications, phony profit reports and the promise of lucrative pay outs. In reality, scammers have gained control of their targets’ cryptocurrency wallets and are withdrawing currency whenever they want. Gradually, scammers empty the wallets, all while continuing to assure targets that everything is fine, and finally cut off communications.”

More information is available in “Liquidity Mining Scams Add Another Layer to Cryptocurrency Crime.”

How to Protect Against Liquidity Mining CryptoCrime

Sophos recommends that device users install Sophos Intercept X for Mobile for security against potential malicious liquidity mining applications. Users should also avoid engaging with random Direct Messages about liquidity mining from unknown sources via Twitter, What’s App, Telegraph, and other social networking platforms.

Additional Resources

About Sophos

Sophos is a worldwide leader in next-generation cybersecurity, protecting more than 500,000 organizations and millions of consumers in more than 150 countries from today’s most advanced cyberthreats. Powered by threat intelligence, AI and machine learning from SophosLabs and SophosAI, Sophos delivers a broad portfolio of advanced products and services to secure users, networks and endpoints against ransomware, malware, exploits, phishing and the wide range of other cyberattacks. Sophos provides a single integrated cloud-based management console, Sophos Central – the centerpiece of an adaptive cybersecurity ecosystem that features a centralized data lake that leverages a rich set of open APIs available to customers, partners, developers, and other cybersecurity vendors. Sophos sells its products and services through reseller partners and managed service providers (MSPs) worldwide. Sophos is headquartered in Oxford, U.K. More information is available at www.sophos.com.

A photo accompanying this announcement is available at:

https://www.globenewswire.com/NewsRoom/AttachmentNg/3ec66479-d834-499d-b7f7-0481d334c6f1

CONTACT: Contact: Samantha Powers, [email protected]

Votes: 
Share Content: 
 
X