Crypto fraud related to multi-signature wallets

introduction

Security in cryptocurrency trading is just as important as circumvention. If you don’t take the appropriate action, there are multiple ways to steal your funds. A safe step you can take to store assets from fraud is to rely on a hardware wallet. Its physical presence is necessary to extract the code. Generally, only one wallet custodian needs to sign or key to access internal funds. However, there is another type of security that allows you to add an additional layer of safety. It’s a multi-signature wallet.

What is a Multi-Sig Wallet?

A regular wallet only has one person responsible for sending or receiving funds. However, this is not feasible if a large company decides to hold the reserve cryptocurrency. If one person is entrusted with the key, or if a seed phrase is provided to the group, it could still violate the funds. In both cases, trust can always be breached. The solution is a multi-signature wallet. There must be multiple people to access the wallet. If a burglar tries to steal funds, he cannot do it with the help of one key.

How to operate a multi-sig wallet?

There are many options to set up a multi-signature wallet, depending on the owner’s needs and requirements. Sometimes two keys are set up and you need both. Similarly, options such as 2 out of 3, 3, 3, 4, and so on are available. These choices not only provide security, but also provide flexibility. Therefore, multi-sig wallets are a great option for teams and businesses.

I’ll use it for fraud

You may wonder how scammers can steal from multisig wallets. There are several ways to scam related to multisig wallets. The most common of them is when you come across someone who is seeking some type of help and provide keys to your wallet. You laugh at their cleverness and come to think you have control over their wallets. This is actually a feeder trap.

Baitwalet Trap

Open the wallet and find a handsome amount of $USDT or $BTC, etc. When you try to transfer it to your wallet, you will see that you don’t have enough tron ​​to pay your gas fee. Transfer the required gas fees from your wallet to their wallet. But in the end you discover that their wallet is a multi-sig wallet whose other keys are owned by scammers. You were fooled to supply their wallets with gas fees. It is essential to avoid acting on comments that pretend to reveal your private key or seed phrase on public platforms.

This type of scam would have just sent as much cryptography into the con artist’s wallet as it would be necessary to pay the gas fee, and if the con artist had locked in more casualties, they would have stole a significant amount. Unfortunately, this is not just a scam that can occur through or through multi-sig wallets. The more elaborate kind of scam involves directly targeting wallets and causing much greater losses.

Scammers as co-signatures for wallets

Some multisig scams focus on tweaking beyond the bait wallet and instead to tweak users to change their wallet settings. In these cases, the scammer will persuade the victim to convert a regular wallet into a multi-sig wallet. Often, it adds extra “security” and allows access to special features. As part of the setup, victims are told to add the scammer’s address as co-signers.

Once this step is taken, the victim loses real ownership. If the wallet is configured to require all signatures for the transaction, the fraudster can simply withhold approval, so the funds are effectively locked in. In other setups where the majority of the signature is sufficient, the scammer can already control multiple keys and use this advantage to move funds completely out of the wallet.

In networks like Tron, this is often deployed through a “owner’s permission” change, and when you add a scammer’s address, it is placed on the same footing as the original owner. Victims may still see assets in their wallets, but they require the consent of the con artist every time they try to move them. In other circumstances, the scammer creates fake investment pools or airdrop schemes that require users to add addresses as co-owners. With control in place, the scammers will freeze or clean the funds indefinitely.

Unlike simple gas foot traps, these elaborate scams can directly drain your own wallet. The important danger is that the victim is willing to hand over the rights of co-signature without realizing it, and not knowing the ability to block or steal funds to the fraudster.

How to avoid multi-sig wallet scams

1. To avoid bait wallet traps, check the wallet address in Tronscan Blockchain Explorer and check if the wallet is a multi-sig wallet. Wallet addresses to bait victims usually have very limited functionality. The behind the scenes scammers are real controllers.

2. Do not share seed phrases or private keys with anyone. Store in a safe place. Remember, there is never a company that asks you about your private key.

3. Do not use third party wallet apps. Always use the software provided by the official wallet website.

4. A wise habit for multi-sig users is to regularly check who has access to the wallet. With most wallets, you can check permissions through settings. If you notice an unknown signer, please delete it immediately. It is also wise to revoke access to unused Defi apps.

5. Make sure that your wallet has 2FA enabled, just like any other application or account.

6. Don’t think of yourself as clever enough to be wise and deceived. Despite all your knowledge, con artists continue to innovate their tricks. So be aware of what is happening in the market and act accordingly.

Conclusion

Instantly, multi-signature wallets are a great way to protect assets, but can also be used by fraudsters to steal funds. You may be victimized by a baitwallet trap and send the funds to them as a transaction fee. The scammers will drive you to pretend to be from customer care and add it as a co-signature in your wallet. Therefore, you need to be careful and be vigilant about digital wallet money.