Illusions and Dilemmas: Social Engineering and the Game of Human Nature in the Crypto World
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Illusions and Dilemmas: Social Engineering and the Game of Human Nature in the Crypto World
Humans are the weakest link in the security system.
Navigating Web3 tides with focused insightsAuthor: ChandlerZ, Foresight News
Security is like a chain—it's only as strong as its weakest link. And people are the Achilles' heel of cryptographic systems. While the market remains obsessed with building more complex cryptographic protections, attackers have long discovered a shortcut: there's no need to crack the code—just manipulate the person using it.
People are both the most vulnerable and the most neglected component. In other words, individuals represent the easiest vulnerability for hackers to exploit, yet they receive the least investment and see the slowest improvement in enterprise security strategies.
According to Chainalysis, a blockchain analytics firm, North Korean hackers carried out 47 sophisticated attacks in 2024, stealing $1.3 billion worth of digital assets from global crypto platforms—an increase of 21% year-on-year. Even more alarming was the February 21, 2025 hack on Bybit exchange, which resulted in approximately $1.5 billion in stolen crypto assets—the largest single theft in cryptocurrency history.
In many past major breaches, traditional technical vulnerabilities were not the root cause. Despite billions spent annually by exchanges and projects on technical defenses, within this world seemingly built on mathematics and code, participants often underestimate the threat posed by social engineering.
The Nature and Evolution of Social Engineering
In information security, social engineering has always been a unique and dangerous attack method. Unlike exploiting technical flaws or cryptographic weaknesses, social engineering manipulates human psychological vulnerabilities and behavioral habits to deceive and control victims. It requires minimal technical expertise but frequently results in devastating losses.
The digital era has equipped social engineering with new tools and stages. This evolution is especially evident in the crypto space. Early cryptocurrency communities consisted mainly of tech enthusiasts and cypherpunks who generally possessed vigilance and technical literacy. However, as crypto becomes increasingly mainstream, growing numbers of non-technical users enter the market, creating fertile ground for social engineering attacks.
Moreover, the highly anonymous and irreversible nature of transactions makes crypto an ideal target for attackers. Once funds are transferred to wallets under their control, recovery is nearly impossible.
Social engineering succeeds so easily in crypto largely due to cognitive biases inherent in human decision-making. Confirmation bias causes investors to focus only on information that aligns with their expectations; herd mentality fuels market bubbles; and FOMO (fear of missing out) often drives irrational decisions during downturns. Attackers skillfully weaponize these psychological tendencies.
Compared to attempting to break complex encryption algorithms, launching social engineering attacks is far cheaper and significantly more effective. A carefully crafted phishing email or a seemingly legitimate job offer laced with traps can be much more efficient than tackling technical challenges head-on.
Common Social Engineering Tactics
While diverse in form, all social engineering attacks revolve around one core principle: gaining the victim’s trust to extract sensitive information. Below are several common methods:
Phishing
Email/SMS Phishing: Sending fake links impersonating exchanges, wallet providers, or other trusted institutions to trick users into revealing seed phrases, private keys, account passwords, or other sensitive data.
Impersonating Social Media Accounts: On platforms such as Twitter, Telegram, and Discord, attackers pose as "official customer service," "influencers," or "project teams," posting messages containing malicious links or fraudulent event announcements to lure users into clicking and exposing keys or sending cryptocurrencies.
Fake Browser Extensions or Websites: Creating counterfeit websites that closely mimic real exchanges or wallet interfaces, or tricking users into installing malicious browser extensions. Once users enter credentials or authorize access on these pages, their keys are compromised.
Impersonating Customer Support / Technical Assistance
This commonly occurs in Telegram or Discord groups, where scammers pose as "administrators" or "tech support," offering help with deposit issues, failed withdrawals, or wallet sync errors. They then guide victims to reveal private keys or send funds to designated addresses.
They may also privately message or invite targets into small groups, falsely claiming they can “recover lost coins,” when in reality they aim to steal additional funds or obtain keys.
SIM Swap Attacks
Attackers bribe or deceive telecom customer service representatives to transfer a victim’s phone number to a SIM card they control. With access to the number, attackers can reset passwords via SMS verification or two-factor authentication (2FA) for exchanges, wallets, or social accounts, thereby gaining full access to the victim’s crypto assets.
SIM swaps are particularly prevalent in the U.S., though cases have emerged globally.
Social Engineering Through Fake Recruitment / Headhunting
Attackers send “job offers” via email or social media containing malicious files or links, tricking recipients into downloading and executing malware.
If the target is an employee or core developer at a crypto company—or a high-net-worth individual holding large amounts of crypto—the consequences can be severe, including infrastructure breaches or key theft.
The 2022 Axie Infinity Ronin bridge breach, according to The Block, was linked to a fraudulent job advertisement. Insiders revealed that hackers contacted an employee at Sky Mavis, Axie Infinity’s developer, through LinkedIn. After multiple interview rounds, the employee was told they had been hired at a high salary. They then downloaded a forged employment letter disguised as a PDF, allowing hacker software to infiltrate the Ronin system. As a result, the attackers gained control of four out of nine validators on the Ronin network—one short of full control—and later exploited an unreleased permission held by Axie DAO to complete the takeover.
Fake Airdrops / Giveaway Scams
On platforms like Twitter and Telegram, fake "official" events appear regularly—for example, promising to double any amount sent to a specific address. These are all scams.
Attackers often use names like "whitelist airdrop" or "testnet airdrop," tricking users into clicking unknown links or connecting their wallets to phishing sites, thus stealing keys or authorizations.
In 2020, Twitter accounts of prominent figures including Barack Obama, Joe Biden, Warren Buffett, and Bill Gates, along with several well-known corporate accounts, were hijacked. Hackers posted messages promising to double any cryptocurrency sent to specified addresses. Similar "double your money" scams impersonating Elon Musk continue to flood YouTube today.
Insider Threats / Former Employee Breaches
Disgruntled former employees or current staff bribed by attackers may leverage their knowledge of internal systems and procedures to steal user databases, private keys, or conduct unauthorized transactions.
In such scenarios, technical vulnerabilities and social engineering combine closely, often resulting in large-scale losses.
Counterfeit Hardware Wallets with Backdoors or Tampered Firmware
Attackers sell hardware wallets below market price or with false authenticity guarantees on platforms like eBay, Xianyu, Telegram groups, or other e-commerce/secondhand marketplaces. These devices often contain replaced chips or modified firmware. Users who unknowingly purchase refurbished or second-hand units might find that the seller has pre-loaded the private keys. Once funds are deposited, attackers can immediately drain them.
Additionally, after data breaches, some users receive free replacement or "security-upgraded" devices mailed from attackers posing as legitimate manufacturers (e.g., Ledger). The package includes a new seed phrase card and instructions. If users adopt these preset phrases or migrate their original ones to the fake device, attackers gain full access to their wallet assets.
The above examples represent just the tip of the iceberg. The diversity and adaptability of social engineering make it especially destructive in the cryptocurrency space. For most ordinary users, these attacks are extremely difficult to detect and defend against.
Greed and Fear
Greed remains the most exploitable weakness. During periods of extreme market activity, herd behavior drives people to rush into suddenly popular projects without scrutiny. Fear and uncertainty are also common entry points for social engineers. When markets experience sharp volatility or projects face problems, scammers issue "urgent notices," claiming the project is in critical danger and urging users to move funds to so-called safe addresses. Many newcomers, fearing losses, struggle to think clearly and easily fall prey to such panic-driven manipulation.
Furthermore, FOMO is ubiquitous in the crypto ecosystem. The fear of missing the next bull run or the next Bitcoin leads people to invest hastily and participate in projects without basic ability to assess risks or verify legitimacy. Social engineers need only create an atmosphere of fleeting opportunity—“miss it now, never double again”—to lure investors directly into their traps.
Risk Recognition and Prevention
Social engineering is hard to prevent precisely because it targets human cognitive blind spots and psychological weaknesses. As investors, you should keep the following key points in mind:
Enhance Security Awareness
Never casually disclose your private key or seed phrase. Under no circumstances should you reveal your private keys, seed phrases, or sensitive personal information to anyone. Legitimate official teams almost never request such details via direct messages.
Beware of “unrealistic return promises.” Any campaign advertising “risk-free high returns” or “multiplied principal repayment” is highly likely to be a scam.
Verify Links and Sources
Use browser extensions or official channels to confirm website URLs. Always double-check the domain names of cryptocurrency exchanges, wallets, or decentralized applications (DApps).
Avoid clicking suspicious or unknown links. If someone claims there’s an “airdrop benefit” or “official compensation,” immediately verify through official social media or official websites.
Exercise Caution in Communities and on Social Media
Check official account verification badges, follower counts, and interaction histories. Avoid blindly joining private chat groups or clicking unknown links shared inside them.
Treat “free lunch” offers with skepticism. Observe, ask questions, and consult experienced investors or official sources before acting.
Cultivate a Healthy Investment Mindset
Approach market fluctuations rationally and avoid being swept up by emotions triggered by sudden price surges or crashes.
Always prepare for the worst-case scenario. Don’t let FOMO override your risk assessment.
The Enduring Importance of the Human Factor
Human nature is the foundation upon which social engineering thrives. Attackers design elaborate scams targeting traits such as herd mentality, greed, fear, insecurity, and FOMO.
As blockchain and crypto technologies evolve and business models expand, social engineering tactics will also advance. The maturation of deepfake technology may soon pose even greater threats—attackers could use synthesized video and audio to convincingly impersonate project leaders and conduct real-time calls with victims. Multidimensional social engineering will also escalate, with attackers potentially lurking across multiple platforms over extended periods, gathering intelligence and deploying carefully orchestrated emotional manipulation against targets.
The persistent presence of social engineering reminds us that no matter how advanced the technology, the human factor remains the core of any system. Completely eliminating social engineering may be unrealistic. Only by paying equal attention to both code and people can we build more resilient systems.
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