In recent developments highlighting the growing risks in the digital asset space, the Cardano Foundation's X account was compromised in a scam promoting a fake token, while Brooklyn authorities shut down a network of fraudulent NFT marketplaces targeting artists. These incidents, which resulted in significant financial losses for victims, bring attention to the importance of vigilance as bad actors exploit the growth and innovation within the crypto and NFT markets.
Cardano Foundation’s X Account Hacked: Fraudulent Token Scheme Exploits Users
The Cardano Foundation faced a significant cybersecurity incident on Dec. 8, 2024, when its official X account was compromised by a threat actor. The hacker used the platform to promote a fraudulent token, "ADAsol," falsely claiming it was the successor to Cardano's native ADA token. Additionally, the attacker asserted that Cardano would cease support for ADA due to an alleged lawsuit from the US Securities and Exchange Commission (SEC).
The fake ADAsol token garnered approximately $500,000 in trading volume before crashing by 99%. Many users fell victim to the scam in the brief window before the account was secured and the fraudulent posts removed. Cardano founder Charles Hoskinson confirmed the hack on social media, urging the community to remain vigilant.
The compromised account no longer hosts the scam-related content, but the incident serves as a stark reminder of the risks associated with malicious activities in the crypto space. The Cardano Foundation emphasized that no other parts of its ecosystem were affected by the breach. However, it cautioned users against interacting with links shared via its X account until further notice.
The Cardano Foundation's hack is part of a broader trend of cybersecurity breaches targeting prominent crypto and public figures' X accounts. These incidents often result in significant financial losses and erode trust within the community.
In December 2023, Compound Finance’s X account fell prey to hackers, who posted phishing links disguised as legitimate protocol content. These links redirected users to a site mimicking Compound's official website, promoting fraudulent COMP tokens. Unsuspecting users who interacted with these links found their crypto assets drained.
October 2024 saw multiple high-profile X account hacks. Symbiotic, a restaking protocol, was targeted by a phishing scheme disguised as an airdrop checklist. Similarly, Eigenlayer, another restaking protocol, had its X account used to promote a fake airdrop campaign. Both incidents resulted in losses for users who were tricked into connecting their wallets to malicious sites.
On Oct. 29, 2024, the founder of Truth Terminal AI reported their X account had been hijacked to promote a fraudulent meme coin. In November 2024, the X account of rapper Wiz Khalifa was also compromised, with the threat actor pushing a fake celebrity meme coin named "WIZ." This incident leveraged Khalifa’s fame to exploit unsuspecting fans.
Community Vigilance: The First Line of Defense
The rise of social media account hacks targeting crypto entities stresses the need for increased vigilance. The Cardano Foundation's swift acknowledgment of the incident and efforts to secure its compromised account are commendable. However, such incidents show the necessity for enhanced security measures and community awareness.
Users should adopt the following best practices to avoid falling victim to similar schemes:
Verify Sources: Always confirm the authenticity of announcements by cross-referencing them with official websites or verified channels.
Avoid Suspicious Links: Refrain from clicking on links in social media posts, even if they appear legitimate.
Enable 2FA: Secure your own accounts with two-factor authentication (2FA) to reduce the risk of being hacked.
Use Wallet Security Features: Leverage hardware wallets or wallet apps with robust phishing detection.
While the crypto industry must address vulnerabilities within its community, social media platforms also bear responsibility. These platforms need to prioritize security for high-profile accounts, including enhanced monitoring and rapid response mechanisms for compromised accounts.
The Cardano Foundation hack serves as another cautionary tale in the crypto space, reminding users of the importance of vigilance and proactive measures to protect their assets. As the Foundation works to secure its ecosystem and restore trust, the broader crypto community must remain alert to the persistent threat of social media scams. With better security practices and community collaboration, the industry can mitigate the risks posed by malicious actors.
Brooklyn DA Shuts Down 40 Fake NFT Marketplaces After Artist Loses $135,000 in Scam
The Brooklyn District Attorney’s Office has dismantled a network of 40 fraudulent non-fungible token (NFT) marketplace websites that targeted unsuspecting artists, including an 85-year-old victim who was scammed out of $135,000. The operation, announced on Dec. 6, sheds some light on the growing sophistication of digital art scams and the vulnerability of artists navigating the NFT space.
The victim, an elderly artist, was contacted on LinkedIn by a scammer posing as an art dealer. Convincing the artist to mint his work on a counterfeit NFT marketplace designed to mimic the popular platform OpenSea, the scammer lured him with promises of lucrative profits.
The victim was later informed that his artwork had generated $300,000 in sales, but there was a catch: to access these earnings, he needed to pay a $135,000 “fee.” Trusting the scheme, the artist liquidated his retirement account, maxed out his credit cards, and even took out a loan to cover the amount. Once the payment was made, the promised profits never materialized, leaving the artist financially and emotionally devastated.
A Network of Fraudulent Sites Uncovered
Brooklyn District Attorney Eric Gonzalez revealed that the tactics used in this case led investigators to uncover a broader network of 40 fraudulent websites targeting artists. The investigation, spearheaded by the DA’s Virtual Currency Unit, traced the stolen funds to accounts in Nigeria. The funds were primarily converted to Nigerian currency, closing off avenues for recovery.
Some of the fake NFT marketplaces went beyond scamming users for money. They also sought to gain access to victims’ cryptocurrency wallets by asking for seed phrases. This would allow scammers to completely drain a user’s wallet, further compounding financial losses.
This case is not an isolated incident. The DA’s office disclosed that two additional artists, one from Georgia and another from California, were duped by the same scam. The counterfeit marketplaces’ resemblance to legitimate platforms like OpenSea demonstrate the increasing sophistication of cybercriminals in the NFT and crypto sectors.
The case has drawn attention to the vulnerabilities artists face in the evolving NFT market, where the promise of high profits often clouds judgment. Scams involving fake NFT marketplaces, phishing attacks, and seed phrase theft are becoming alarmingly common, exposing both novice and seasoned creators to significant financial risks.
District Attorney Gonzalez emphasized the importance of raising awareness to prevent further victims. “It is my hope that by shutting these domains and raising awareness about this scheme, we will prevent others from falling victim to this scam,” he stated.
The DA’s office offered the following advice to artists:
Use Established Platforms: Sell your work only on well-known, reputable NFT marketplaces. Platforms like OpenSea and Rarible have established trust in the community and have mechanisms to report suspicious activity.
Beware of Phishing Attempts: Avoid clicking on links in unsolicited emails or messages, especially those that direct you to mint or sell NFTs on unfamiliar platforms.
Protect Your Wallet: Never share your cryptocurrency wallet’s seed phrase. Legitimate platforms and transactions will never require this information.
Verify Opportunities: If a deal seems too good to be true, it probably is. Seek advice from fellow artists or trusted sources before proceeding.
The Brooklyn DA’s investigation shows the need for increased vigilance in the digital art and cryptocurrency spaces. The lack of regulatory oversight in these emerging markets has made them fertile ground for scams and fraudulent activities.
While shutting down the fraudulent websites is a significant victory, the recovery of funds remains a challenge, especially when the money is quickly transferred and converted in jurisdictions with limited cooperation. This case highlights the need for international collaboration in addressing crypto-related crimes and protecting victims.
As NFTs continue to grow in popularity, so too do the risks associated with their adoption. This case serves as a stark reminder that while the digital art market offers new opportunities for creators, it also comes with unique challenges. Artists and collectors alike must remain vigilant and take proactive steps to safeguard their work and investments.
For now, the Brooklyn District Attorney’s Office hopes that its efforts to shut down fraudulent websites and educate the public will deter future scams and provide a measure of justice for victims of these schemes.
