A new report from WithSecure Inc. details a growing network of cryptocurrency scams using thousands of YouTube videos to lure in potential victims.
The thousands of videos often appear legitimate, with some receiving inauthentic engagement from hundreds of other YouTube channels within the scam network. The network is said to be managed by a small group of scammers, estimated to be around 30 people, who use Telegram for communication and running operations.
The group uses automation to copy and paste comments for the videos in an attempt to legitimize the fraudulent apps to potential victims. The videos recommend fraudulent web-based apps posing as Tether cryptocurrency investment schemes. The researchers found more than 700 web addresses hosting the fraudulent apps.
Potential investors are lured into participating through the scam YouTube videos. Once sucked in, investors are asked to transfer money from an existing cryptocurrency wallet to one of the apps.
“This network seems to be targeting existing cryptocurrency investors with low-quality videos in different languages without localizing them to reach different regions, so I’d say it’s a pretty opportunistic approach,” WithSecure Intelligence Researcher Andy Patel explained. “Typically, this results in a large volume of small transactions. But as that volume increases, so do the odds of them getting lucky and finding someone able and willing to invest more substantial amounts.”
The report notes that according to the U.S. Federal Trade Commission, 46,000 people reported losing over $1 billion in crypto to scams between the beginning of 2021 and June 2022, with nearly half saying it started on a social media platform.
Based on data the WithSecure researchers collected during the latter half of 2022, it’s estimated that the fraudulent apps promoted in the YouTube videos successfully generated more than $100,000 in revenue from approximately 900 victims.
“I do not believe these particular scams are very profitable,” Patel added. “However, they’ve clearly figured out how to game YouTube’s recommendation algorithms by using a fairly straightforward approach. Moderating social media content is a huge challenge for platforms, but the successful amplification of this content using pretty simple, well-known techniques makes me think that more could be done to protect people from these scams.”