The Problem

Digital assets are becoming more popular and valuable, making them a more appealing target for malicious actors and criminals. On top of that there are new regulations being written constantly to attempt to combat illicit activities and you need to be ready and compliant.

Malicious Actors Are Everywhere

Several malicious smart contracts have been used in recent years by criminals. However, a new trend toward a more proactive approach appears to be on the rise, in which attackers do not rely solely on brute force. Instead, they attempt to convince you to just give them your assets or access. This is known as social engineering and can be very elaborate and complex.

Methods Illicit Actors Utilise

Fake Projects ICO

There are many fake projects created daily on various blockchains. They put up websites and pay for marketing. List on a decentralized platform. If successful it gets listed on a decentralized exchange, the malicious actors will immediately remove all liquidity and leave you with tokens that have no value.

Malicious Code

Some developers intentionally write obfuscated functions into the code for use at a later date. When they have reached their planned exploit criteria they will call the function and steal all investor assets. Some of these functions include hidden mint, recovery of burned tokens, theft of liquidity and stopping trading.


You will find illicit actors impersonating people from everywhere trying to gain access to your assets and infrastructure. Fake listing agents, exchange employees, tax officials and even law enforcement. They are relentless and will constantly probe for any security weaknesses to exploit and gain access.

Vulnerable Code

Not all smart contract code is audited for security vulnerabilities and not all vulnerabilities are known. Zero-day exploits are used by hackers to steal digital assets from smart contracts. They spend a long time planning, testing and executing attacks. These groups are very well organised and often state sponsored.

Lucrative Offers

There are so many websites offering investment broker services it would be impossible to list them all. They all offer guaranteed gains on your investment and all offer tiered entry levels. You will see numbers on the fake dashboard indicating your gains. But when it comes to withdrawal there are problems.

Fear Tactics

Emotional manipulation has been used before law enforcement agencies were created. The blockchain is no different, malicious actors use fear to extract digital assets from victims willingly. They contact the victim however they can and convince you to pay a certain bill or invoice to prevent loss of assets or legal action.

Regulations & Compliance

The regulations being enforced around the globe are very real and if you don't stay compliant with them then you could suffer asset loss or worse. With regulatory bodies still catching up with the decentralized finance movement you might find that your compliance measures today are no longer compliant tomorrow.

The Problem Summarized

Blockchain technology is a rapidly emerging industry and along with it come new ways for criminals to operate. There is a problem with the education and understanding of interactions with blockchains. The uses cases and exploits are not always financially motivated. Your security is constantly probed for potential exploitation. It is often the case that a security vulnerability is discovered after an attack.