Bitrace highlights rising crypto fraud risk as trading platforms introduce web3 wallets

The integration of web3 wallets into mainstream trading platforms heralds a new era in digital finance, blending the realms of cefi and defi while also raising concerns about increased vulnerability to crypto fraud.

According to Bitrace and WuBlockchain, the integration of web3 wallets into mainstream trading platforms like OKX and Binance signals a significant shift. This fusion of centralized finance and decentralized finance is reshaping user interaction with digital assets and decentralized applications. However, this transition is not without its pitfalls, particularly regarding fraud risks.

Bitrace: Beware as Trading Platforms Launch Web3 Wallets, Intensifying Cryptocurrency Fraud Risks

The launch of Web3 wallets by platforms like OKX and Binance signifies the integration of Centralized Finance (CeFi) and DeFi as an industry trend. However, while breaking down the…

— Wu Blockchain (@WuBlockchain) November 28, 2023

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The convenience of integrated wallets comes with a hefty price: an upsurge in cryptocurrency fraud. Notable cases include fake BNB yield fraud, where scammers offer high returns for depositing Ethereum (ETH) into a fake liquidity pool, and the holding USDT mining L1 token scam, where victims are lured into transferring asset permissions under the guise of lucrative mining protocols. The prevalence of selling fake USDT scam further highlights the vulnerability of users, where counterfeit stablecoins are sold, exploiting the trust of novice participants.

The integration of web3 wallets into trading platforms has inadvertently facilitated fraud. The official veneer of built-in wallets reduces skepticism among users, making it easier for fraudsters to gain trust while the lack of adequate guidance for new entrants in the crypto space leaves them susceptible to a boatload of scams. The inherent permissionless nature of cryptocurrency wallets, coupled with their anonymity, makes them ideal targets for illicit activities.

To combat these risks, it is important for trading platforms to implement comprehensive countermeasures. This includes incorporating educational content on on-chain security, introducing functionality restrictions for new users to prevent uninformed decisions, and collaborating with third-party security organizations to integrate threat intelligence data.

Read more: Criminal gang behind fake crypto wallets arrested in China

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