Aurora Labs chief product officer Matt Henderson says there was a sophisticated over-the-counter (OTC) scam running around that nearly tricked him into losing stock of his hard-earned cryptocurrency.
Henderson explained the details of his personal engagement with a scam artist known as “Olai” to his Twitter followers on August 5.
The Olai scam basically involves deceiving the victim into believing that the payment was received for an OTC crypto transaction, when in reality it was not.
Today I almost got into an amazing and dodgy crypto scam during an OTC transaction. Read on to find out what happened, so you can avoid it happening to you.
– Matt Henderson (@dafacto) August 5, 2022
how did you work
Henderson explained that the crypto scam started when Olai contacted him on the Telegram messaging app, inquiring about purchasing AURORA tokens with USC Coin (USDC).
The spouses agreed to conduct the transaction via escrow, a joint strategy that a neutral and trusted third party holds assets on both sides of the transaction and releases to the counterparty when payment terms are met.
In this case, Henderson chose Aurora Labs chief security officer Frank Brown to act as the escrow agent, whom he initially referred to as “Steve” in a Twitter thread.
Olay suggested:
1. Send AURORA to Steve
2. Olai sends me a small USDC test transaction
3. Steve sent Olai a small AURORA test transaction
4. Olai sends me USDC credit
5. Steve sends them credit for AURORA– Matt Henderson (@dafacto) August 5, 2022
However, Henderson discovered something fishy when his escrow partner shared a screenshot of him that supposedly gives the go-ahead for the full amount of AURORA tokens to be issued to the buyer.
According to Henderson, the scammers duplicated his Discord profile and directed Brown to release his AURORA token credit to the scammers.
The Discord block function made sure that Henderson was not aware that his profile had been cloned and that scammers were impersonating him.
Based on that, some security steps I will take in the future:
1. All money sent to Escrow. No exceptions.
2. Examine transactions in block explorers. Do not accept verbal affirmations.
3. Always create group chats yourself.
4. Check out-of-band identifiers and assertions.
– Matt Henderson (@dafacto) August 6, 2022
After successfully dodging the fraud, Henderson later deciphered the intricacies of the scheme, warning anyone who trades cryptocurrency through OTC means to be extremely careful and avoid falling victim to the intricate scheme.
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Also share that a scammer named “Olai” may still be active in the community, as someone using a similar name and tactics observer on Telegram, according to Twitter user Scott Yeager.
“How curious… I was recently contacted by Olai Olsen on Telegram trying to start an OTC deal and offer USDC. Same character?”
Earlier this year, the US Federal Trade Commission found that nearly half of all crypto-related frauds originated from social media platforms in 2021.
In a June report, the Federal Trade Commission (FTC) reported that fraudsters lost up to $1 billion in cryptocurrency over the course of the year, a fivefold increase from 2020.
