FBI Warns Crypto Owners Not To Fall For ‘Liquidity Mining Scam’ – Featured Bitcoin News

The Federal Bureau of Investigation (FBI) has warned crypto investors of a scam using an investment strategy called liquidity mining. “This scam has been responsible for over $70 million in combined victim losses,” the law enforcement agency said.

FBI Warns Against Cryptocurrency Mining Scams

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

The FBI is issuing this public service announcement to warn US citizens of a cryptocurrency scam using an investment strategy called Liquidity Mining where 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 into a liquidity pool to provide traders with the liquidity necessary to execute 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 delete victims’ funds without notification or permission from the victim,” the FBI warned.

“Fraudsters 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 added.

Victims of a liquidity mining scam move cryptocurrency from their wallets to the liquidity mining platform, the FBI says. After investing, they often see the claimed returns on a fake dashboard. Believing that their investments are a success, they buy additional cryptocurrency. Fraudsters eventually 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 of finance and cryptography.