An Important Warning About A Cryptocurrency Scam Using An Investment Strategy Called Liquidity Mining
Scammers may refer to the investment opportunity as a ‘liquidity pool’, ‘liquidity mining’, or ‘mining pool’ – for purposes of this alert, the term liquidity mining will be used to describe all iterations of the scheme.
This is a variation on the Pig Butchering Crypto Relationship/Investment scam. In Pig Butchering Sha Zhu Pan 殺主盤 “Pig Butchering”
This is a scam type that originated in China involving the scammer developing a relationship with the victim - sometimes romantic sometimes not - and leading the victim to invest in a fake company or asset. These typically target smart younger women. scams A Scam is a confidence trick - a crime - is an attempt to defraud a person or group after first gaining their trust through deception. Scams or confidence tricks exploit victims using their credulity, naïveté, compassion, vanity, irresponsibility, or greed and exploiting that. Researchers have defined confidence tricks as "a distinctive species of fraudulent conduct ... intending to further voluntary exchanges that are not mutually beneficial", as they "benefit con operators ('con men' - criminals) at the expense of their victims (the 'marks')". A scam is a crime even if no money was lost. it is a straight investment with high return, without the complication of the liquidity minding aspect.
This is where the scammers exploit owners of cryptocurrency, typically Tether (USDT) and/or Ethereum (ETH).
The scammer A Scammer or Fraudster is someone that engages in deception to obtain money or achieve another objective. They are criminals that attempt to deceive a victim into sending more or performing some other activity that benefits the scammer. builds a professional or personal relationship with victims over a few days to weeks, gives instructions for purchasing if the victims do not already own cryptocurrency, and entices them to participate in liquidity mining by guaranteeing a return on investment of one to three percent daily. Scammers convince victims to link their cryptocurrency wallets to a fraudulent liquidity mining application. Scammers then wipe out the victims’ funds without notification or permission from the victim.
Since January 2019, according to the FBI FBI - Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, the FBI is also a member of the U.S. Intelligence Community and reports to both the Attorney General and the Director of National Intelligence. A leading U.S. counter-terrorism, counterintelligence, and criminal investigative organization, the FBI has jurisdiction over violations of more than 200 categories of federal crimes, including financial fraud.’s Internet Crime Complaint Center (IC3) and open source, this scam has been responsible for over $70 million in combined victim losses.
SCARS NOTE: it is very important to know that cryptocurrency is not automatically gone. It can be traced and if it is sitting in someone’s wallet, it can be recovered by law enforcement. See below.
How This Scam Works:
In the direct approach:
- Scammers approach potential victims through an unsolicited direct message (DM) on social media, dating applications Applications or Apps
An application (software), commonly referred to as an ‘app’ is a program on a computer, tablet, mobile phone or device. Apps are designed for specific tasks, including checking the weather, accessing the internet, looking at photos, playing media, mobile banking, etc.
Many apps can access the internet if needed and can be downloaded (used) either for a price or for free.
Apps are a major point of vulnerability on all devices. Some are designed to be malicious, such as logging keystrokes or activity, and others can even transport malware.
Always be careful about any app you are thinking about installing., or messaging services such as Facebook, Instagram, Twitter, LinkedIn, WhatsApp, etc.
- Victims may also learn of the fraudulent liquidity mining site through someone they know who is unwittingly being scammed on the same platform and has been unknowingly turned into a mule A money mule sometimes called a "smurfer," is a person who transfers money acquired illegally (e.g., stolen) in person, through a courier service, or electronically, on behalf of others (usually criminals that they are knowingly or unknowingly affiliated). Typically, the mule is paid for services with a small part of the money transferred - but not always. Mules may or may not be aware that they are performing these actions. Money mules are often dupes recruited online for what they think is legitimate employment, not aware that the money they are transferring is the product of crime. The money is transferred from the mule's account to the scam operator, typically in another country. Similar techniques are used to transfer illegal merchandise. Mules can be prosecuted for numerous crimes..
- Scammers do not differentiate between individuals who own or do not own cryptocurrency, directing victims who do not already own cryptocurrency to set up an account with a wallet service and purchase cryptocurrency. The scam does not require a minimum investment, allowing the victims to “invest” any amount they want.
- In the Direct Messaging (DM) approach, scammers send out unsolicited messages to potential victims through social media or messaging services. The scammer engages the victim in conversation and attempts to initiate a personal or professional relationship (these can even become a romance), building trust over a period of days to weeks.
- During this period, the scammer will bring up the topic of cryptocurrency investment opportunities, including liquidity mining. The scammer states they have used this technique for a long time and have seen an amazing return on investment. The scam is not immediately apparent since the overall conversation is two people trying to get to know each other.
In the word-of-mouth approach:
- Victims who invested in the scammers’ liquidity mining initially see the purported returns on investment, building a false sense of security that encourages victims to continue purchasing and “investing” additional cryptocurrency.
- The first victim then tells their contacts about this lucrative investment opportunity, bringing more victims into the scam.
- The scammers then proceed to empty the news victims’ wallets. This approach may be more effective since the fraudulent platforms are recommended by someone a victim trusts rather than an unknown party.
- Whatever initial contact method is used, victims who express an interest in the investment receive a link to the fraudulent liquidity mining application.
- In order to begin investing, the victim must link their cryptocurrency wallet to the application. The scammers instruct victims on how to connect their cryptocurrency wallet to the liquidity mining operation by clicking a button to receive a so-called mining certificate, voucher, or node, in exchange for a small fee.
- A pop-up designed to mirror the interface of the wallet application presents a list of permissions it is allegedly requesting.
- By clicking the link and accepting the permissions presented, victims unknowingly authorize scammers to pull an unlimited amount of funds out of their cryptocurrency wallets without permission or notification.
In this Liquidity Mining Scam, victims move cryptocurrency from their wallets to the liquidity mining platform and see the purported returns on a falsified dashboard. Believing their investments to be a success, victims purchase additional cryptocurrency. Scammers ultimately move all stored cryptocurrency and investments made to a scammer-controlled wallet.
Once the victim’s money is stolen, the victim typically contacts their wallet provider or the customer service portal on the scam application. Individuals purporting to be customer service representatives for the scam may present one of several explanations as to where the money went and why it is no longer accessible, culminating in the assertion that the victim needs to deposit additional funds in order to receive their money back. Victims are unable to reclaim their funds even if they add additional funds as directed. (But remember that the crypto may be recoverable by law enforcement after the scam)
Actions to Protect Yourself
- The FIRST RULE – do not invest in opportunities that you do not thoroughly understand.
- The SECOND RULE – do not invest in anyone that you cannot completely verify.
- Be cognizant that investors in legitimate liquidity mining operations deposit funds into the platform and later withdraw the original funds along with any returns generated. Reconsider joining pools that stray from this procedure. In a legitimate liquidity mining process, returns are usually tied to cryptocurrency market fluctuations in the specific cryptocurrency or cryptocurrency pair being used.
- Be vigilant when learning of investment opportunities via online research. Scam websites or applications are not usually advertised online, nor are they allowed to be indexed by webcrawlers from search engines like Google and others – however, Google often mistakes fake website for real ones.. Verify the spelling of web addresses, websites, and email addresses that look trustworthy, but may be imitations of legitimate websites.
- If you are concerned about the legitimacy of the domain, do not connect your cryptocurrency wallet.
- Do not send payment to someone you have only spoken to online, even if you believe you have established a relationship with the individual.
- Authenticate all links sent from known and unknown contacts before clicking.
- Periodically use a third-party token allowance checker to determine whether you have inadvertently permitted any sites or applications access to your wallet.
If you believe you have been a victim of a Liquidity Mining Scam or any other other fraudulent scheme, first report this to your local police. They may or may not know how to help you, but you need to get it reported and get a report number.
Next, we recommend that you file a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov. If possible, include the following:
- Identifying information about the individuals, including name, phone number, address, and email address.
- Financial transaction information such as the date, type of payment, amount, account numbers involved (to include cryptocurrency wallet), the name and address of the receiving financial institution, and receiving cryptocurrency addresses.
- We also recommend that you file a complaint with the U.S. Federal Trade Commission at https://reportfraud.ftc.gov/#/?orgcode=SCARS
- You may also need to file a complaint with your national cybercrime Cybercrime is a crime related to technology, computers, and the Internet. Typical cybercrime are performed by a computer against a computer, or by a hacker using software to attack computers or networks. police unit – see our directory for each of them.