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Aurora Labs chief product officer Matt Henderson says there’s a sophisticated over-the-counter (OTC) trading scam that nearly tricked him into losing a hard-earned cryptocurrency stock.
Henderson described to his Twitter followers on August 5 his personal run-in with a scam artist known as ‘Olai’.
The Olai scam essentially involves tricking a victim into believing that a payment has been received for an OTC crypto transaction, when in fact it has not.
Today I almost got caught in an exciting and fraudulent crypto scam during an OTC trade. Read on to find out what happened so you can avoid it happening to you.
— Matt Henderson (@dafacto) August 5, 2022
How it worked
Henderson explained that the crypto scam started when Olai contacted him on the messaging app Telegram, asking about buying AURORA tokens with USC Coin (USDC).
The pair agreed to conduct the transaction through escrow, a common strategy whereby a trusted, neutral third party holds assets on both sides of the transaction and releases them to the counterparty when payment terms are met.
In this case, Henderson chose Aurora Labs security chief Frank Braun to act as a proxy, whom he initially referred to as “Steve” in the Twitter thread.
Olai suggested:
1. I send AURORA to Steve
2. Olai sends me a small USDC test transaction
3. Steve sent Olai a small test AURORA transaction
4. Olai send me the remaining USDC
5. Steve then sends them the rest of AURORA— Matt Henderson (@dafacto) August 5, 2022
However, Henderson ran into something suspicious when the escrow partner shared a screenshot of what was supposed to be the green light to release the full amount of AURORA tokens to the buyer.
According to Henderson, the scammers replicated his Discord profile and asked Braun to release the remaining AURORA token to the scammers.
Discord’s blocking feature ensured that Henderson was unaware that his profile had been cloned and that scammers were impersonating him.
Based on this, some security measures I will take in the future:
1. All funds sent to escrow. No exceptions.
2. Inspect transactions in block explorers. Do not accept verbal confirmations.
3. Always create group chats yourself.
4. Verify IDs and out-of-band confirmations.
— Matt Henderson (@dafacto) August 6, 2022
After successfully avoiding the scam, Henderson later unpacked the intricacies of the scheme, warning anyone trading crypto over the counter to be extra careful and avoid falling prey to the complex scheme.
Related: Solana-hacked cryptocurrencies could be claimed as a tax loss: Experts
He also shared that the scammer named ‘Olai’ may still be active in the community as a person using a similar name and tactic has spotted on Telegram, according to Twitter user Scott Yeager.
“How curious… I was recently approached by an Olai Olsen on Telegram who was trying to start an OTC deal and offer USDC. Same character?”
Earlier this year, the United States Federal Trade Commission found that nearly half of crypto-related scams originated from social media platforms in 2021.
In a report in June, the FTC reported that up to $1 billion in crypto was lost to fraudsters throughout the year, a fivefold increase from 2020.
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