Updated: Jul 28, 2022
If you are a victim of this scam, please visit also the following subreddit: r/eth_liquidity_scam for more information and support. Thanks to the community above for sharing their thoughts on this in the form of discussion and videos.
When GASO first discovered this Coinbase Wallet dApp scam in mid-October, there was a lot of incentive to write about the scam on our blog to warn would-be victims and then alert Coinbase, which we did.
GASO wants to be accurate as possible in explaining this scheme, especially since it takes many different forms and often the person scammed is using mostly their own experience to describe it. As a result, crowdsourcing this kind of information may be helpful in approximating the truth behind this scheme.
An example of a fraudulent "liquidity mining pool" screenshot
Experience #1 from A Crypto Scam Victim on Blogspot:
"I believe Coinbase Wallet users can easily get phished to give a DApp (Decentralized Application) control and grant spending permission to an external entity."
Experience #2 from nightbirdmedia on YouTube:
"A relatively newer scheme exploits people's lack of knowledge on legitimate crypto mining. The original way of legitimate crypto mining involves much more than a mobile device. It requires a combination of specialized hardware and software. However, the arrival of Decentralized Finance (DeFi) allowed users to invest their assets into liquidity pools. Other ways of making money include Staking, or Yield Farming which are different investment opportunities in the cryptocurrency industry. But please keep in mind that mining, investing, and trading all pose risks that make it difficult to stay profitable in the market. The liquidity mining scheme, however, seems to combine several of these investment opportunities together and tries to appear legitimate.
This scam is often carried out with the help of recruiters on Facebook, Twitter, Instagram, Telegram or other online social media sites. It is very common on sites or groups that discuss cryptocurrency as people that already trade crypto or beginners make easy targets. The recruiter mentions a way to get stable interest similar to a savings account by joining a "mining pool". Users must store the crypto USDT (Tether) in a Wallet app. Generally, the larger the invested amount, the more promised gains a person is told they will make. The Coinbase Wallet app is among, if not, the most popular wallet for this scheme due to its lack of security warnings when entering links into its built in Dapp browser. When a person enters the given URL (provided by the scammer) into a Wallet application, the mining pool will ask the user to click a button to join the mining pool. This button will charge a "network fee" and or a "service fee". Activating the link will establish a smart contract with the scammer and the user may not know it. The user may have to pay an original "service fee" and additional small fees (for example, $1) for an indefinite period of time. Or, all contents are straightaway taken all at once.
Victims will not be fully informed what the smart contract they just entered truly does. Typically what happens is that a person believes that this mining scheme is actually making them money. So they will invest more money from out of pocket. Then one day they will notice that all of their USDT is gone. Once the smart contract is activated the scammer can steal the USDT any time they want but they may wait until a person has invested a considerable amount of money into USDT before they steal it. Some of these mining interfaces even have built in chat features that fool a person into believing they are chatting with the customer support of the wallet. In reality it's a scammer on the other end.
The worst part of this scam is that contacting the wallet's actual customer support (which may not have a built in chat) doesn't typically help a person recover their funds. And what makes it worse is that there are many scammers on Facebook, Twitter, and Instagram that pretend like they can recover money from wallets. Do NOT trust these scammers. You will not have to pay money to recover your own money. Make sure you contact the actual customer support of the wallet."
Experience #3 from Naoki Yuusuke on YouTube:
"Today, I will share with you how I almost got scammed and safely got away from it. I will also share with you how to remove the connections of the websites from your wallet to prevent them from draining or sucking all of your crypto in your Coinbase Wallet. The scammer willingly transferred $30 worth of ETH into my Coinbase Wallet to support the gas fees to receive the coupon in order to join the mining pool. Once you click receive coupon, you will actually give them the permission to deduct unlimited amount of USDT from your Coinbase Wallet."
Scam exploits Coinbase Wallet app through DApp function : https://www.globalantiscam.org/post/n...
How to cancel the connection from scam website to avoid your crypto getting drained : https://tac.dappstar.io/#/
Guy Explains Why You Should Avoid Crypto Mining Pool Scams On Twitter : https://www.indiatimes.com/technology...
This is what happens when you respond to those accounts that PM you on twitter : https://twitter.com/CoinersTakingLs/s...
From a third-party authoritative source: What are DApps, and what are they used for?