“The Biggest Threat to Crypto Users: How to Protect Yourself from Social Engineering Scams”

The Rising Threat of Social Engineering Scams in Crypto: How to Protect Yourself

As the crypto industry continues to grow, so does the sophistication of the threats targeting its users. According to Jeff Lunglhofer, Coinbase’s Chief Information Security Officer, social engineering scams have emerged as the single biggest risk facing crypto holders today. These scams, which involve manipulating individuals into revealing sensitive information or making financial transactions under false pretenses, are affecting both novice and seasoned crypto users alike.

In an interview with Crypto.news, Lunglhofer provided insight into why these scams are on the rise and how users can protect themselves. Here’s a look at the key takeaways for anyone navigating the crypto space.

Why Social Engineering Scams Are a Major Threat

Lunglhofer highlighted that while social engineering scams aren’t exclusive to crypto, the frequency and impact of such scams have spiked in recent years. These scams prey on human psychology, manipulating victims into acting impulsively or without questioning the legitimacy of a communication.

“Social engineering scams are by far the number one threat to crypto enthusiasts, crypto holders, and investors today,” Lunglhofer said. The problem is only getting worse as scammers become more adept at exploiting emotional vulnerabilities, particularly in an increasingly digital world where people often connect with others virtually.

Three Key Ways to Avoid Social Engineering Scams

So, how can you avoid falling victim to these scams? Lunglhofer shared three vital precautions for crypto users:

1. Ignore Unsolicited Calls or Messages Claiming to Be from Reputable Exchanges

Perhaps the most common scam tactic involves unsolicited calls or messages from individuals pretending to be from well-known exchanges like Coinbase, Kraken, or Binance. These scammers often pose as customer support representatives, asking for private information or persuading users to send crypto to a wallet address.

Lunglhofer’s advice? Hang up immediately and do not engage. Then, go directly to the official website of the exchange in question, and contact them through their official channels to verify any concerns.

He notes that following this simple step could prevent up to 80% of social engineering scams.

2. Understand the Difference Between Self-Custody and Exchange Custody

Another crucial step in protecting your crypto assets is understanding the difference between self-custody and exchange custody.

In self-custody, users control their own private keys and wallets, such as with Coinbase Wallet or a hardware wallet. This means you are fully responsible for securing your assets, including safeguarding your seed phrases—a unique set of words used to recover your wallet. Never share these phrases with anyone, as they can grant access to your crypto holdings.

“You control [your wallet] — we have no control over that,” Lunglhofer explained, stressing that self-custody offers greater security but requires more vigilance.

In contrast, exchange custody involves a third-party service managing your private keys on your behalf. This means that the exchange is responsible for the security of your assets, and users trust these platforms to safeguard their holdings. However, it also means putting some level of trust in these services to keep your assets safe.

3. Never Send Crypto to Someone You Don’t Know Personally

The third piece of advice Lunglhofer shared is perhaps the most heartbreaking: Don’t send crypto to someone you don’t know. Scammers often prey on emotions, using tactics like romance scams to exploit loneliness or vulnerability, particularly in online relationships.

These scams typically start with a seemingly innocent conversation—often beginning in a dating app or social media platform—before progressing into more manipulative behavior. Scammers use emotional appeals to convince victims to send crypto, sometimes promising love or emotional connection, but ultimately leaving the victim with nothing.

“I feel like, particularly post-COVID, people were just lonely and vulnerable to [romance scams],” Lunglhofer remarked. “It’s heartbreaking to see people go through that. They just want to be loved.”

Final Thoughts: Vigilance is Key

As the crypto space continues to evolve, so too do the threats that target its users. Social engineering scams remain a significant danger, but by following Lunglhofer’s advice—ignoring unsolicited contact, understanding how to secure your assets, and being cautious about who you trust—you can significantly reduce your risk of falling victim to fraud.

The crypto world is exciting, but it’s also full of pitfalls. Staying educated, remaining vigilant, and knowing how to protect yourself are the best ways to ensure you can navigate this space securely. In the end, your ability to protect your assets is just as important as your ability to grow them.