AVOID BECOMING A CRYPTO SCAM VICTIM

AVOID BECOMING A CRYPTO SCAM VICTIM

UNDERSTAND THE CONCEPT OF  ‘REPLACE -BY -FEES – RBF

As Bitcoin is getting adoption across the world, it is becoming increasingly popular to find some transactions overstaying on the temporary blockchain part, warehousing unconfirmed transactions thereby making such transaction orders which could be payments for goods or services unconfirmed on the Blockchain. When such happens, payers funds are trapped because you cannot initiate another transaction to re-pay the recipient waiting on the other side with the same unconfirmed coins.

 If you find yourself in this embarrasing situation where your transactions remain unconfirmed for unacceptably long time, what would be your next action? You could probably use the Replace-By-Fees method to have your way!  Interesting right? This functionality can also be hijacked by criminal elements to commit fraud and this is the crux of this article.

 

Replace- By- Fees (RBF)

This is a  process of paying a higher transaction fee to replace previously sent, but yet to be confirmed blockchain transaction.

Types of RBF:

1).  Full RBF: In this case, the old transaction is completely replaced with a new one as far as the transaction fee is complete.

2).  Opt -in RBF: Here, the sender chooses whether to use RBF or not. Some wallets come with this feature.

3).  First-Seen-Safe RBF: Here, the sender is only permitted to start a new transaction if the new transaction is the same as the old one.

4).  Delayed RBF: The old transaction will only be changed if it hasn’t been added in a block. The sender would patiently allow  the transaction to be added with a lower fee hence saving his/her money.

 

Why Could These Transactions Be Delayed?

Initiating a transaction on the Blockchain, will get it  stored in the  Mempool first, before the miners attend to them. Miners however, attend to  transactions with higher fees attached, to  enable them maximize profit and also get compensated for the resources they spent while mining.

 

Explaining How RBF Works

Assuming you initiated a transaction on the blockchain at a particular price and  unfortunately, the transaction was delayed without the recipient receiving confirmations.

 To salvage this situation, you simply initiate a new transaction exactly same as the old one, and pay a  higher fee.

Miners will get both the old  and new transaction fees, thereby making your  transaction  more competitive for the miners to attend to.

Some wallets that allow customers to easily  use RBF options include: Bitpay,  Electrum,  Blockstream Green wallets, e.t.c.

 

How Then Can Scammers Exploit Their Victims With This Feature?

Mr Y is a fraudster who  placed an order with your online shop. He made payment  with Bitcoin while enabling  RBF on his wallet and at a reduced  transaction cost. He let’s  you know that  the transaction has been initiated and about to be confirmed on the Blockchain, probably, the confirmations aren’t complete yet and still pending.

As a result, you deliver the item hoping to get a fully confirmed transaction afterwards. Mr. Y could have  used Full RBF or Opt-in-RBF, which will allow him  to  transfer the same amount to his own account using the same UTXO input thereby leading to double-spending. At the end, Mr. Y didn’t pay you, still has your goods which you had earlier delivered and will possibly spend the money somewhere else. Hence, the reason RBF has been heavily chastised.

 

RBF Can Be Used To Prevent Malicious Activities

Have you wondered why it’s necessary to pay both the old and new  transaction fees while using the RBF feature instead of just making payment for the new transaction? It’s a strategy to ensure that it costs something more to cancel an old transaction  thereby preventing Denial-of-Service (DoS) attacks on the Bitcoin network. 

Interestingly,  prior to the RBF feature, an attacker could be able to  create an unlimited number of transactions to cancel previous one in a situation  called the ‘Denial-of Service’ (DoS) attack because he would only pay for the transaction that got confirmed.

DoS attack happens when a hostile cyber threat actor prevents legitimate users from accessing information systems, devices, or other network resources. Hence, with additional costs,these  attacks are extremely costly and less likely to occur.

RBF enabled wallets have  been criticized by persons  who claim that it’s an easy  way to allow double spending of crypto currencies. However,  to actually double spend with crypto currencies, you don’t need a wallet with RBF features.   You could just  input  the same data in all the  various transactions you  wish to create and assign the greatest transaction fee to the transaction returning to your  wallet.

 

How Can I Avoid Being A Victim of Fraud?

To avoid being a victim of fraud through this means:

  • Wait at least for six confirmations before considering a transaction genuine.
  • Ensure the transactions get confirmed on the blockchain afterwards.
  • Avoid transactions tagged with RBF.
  • As a corporate body receiving payments with bitcoins, it’s advised to leverage on wallets with RBF features, this will also enable you to detect transactions that are being initiated with RBF features by your customers. For instance, An RBF unconfirmed transaction will appear in a pinkish tone on BitPay app.

Finally, As a Cryptocurrency user, always confirm your transactions before rendering services. Do not assume that a pending transaction is a confirmed transaction!

For guide on how to avoid being a victim of frauds like this, kindly contact us with contactus@adforensics.ng or follow our social media platforms for further guides.

Chainalysis Partners with A&D Forensics, Expanding Cryptocurrency Coverage of Africa

Chainalysis Partners with A&D Forensics, Expanding Cryptocurrency Coverage of Africa

NEW YORK, June 9, 2020 — Chainalysis, the blockchain analysis company, and A&D Forensics, Africa’s leading blockchain and financial forensics firm, today announced a partnership that will further Chainalysis’ coverage of the African cryptocurrency landscape. In April, Chainalysis announced the launch of its partnership program, which targets key infrastructure providers to broaden cryptocurrency transaction monitoring via simpler integrations, distribution partners in new global markets, and data providers to bolster Chainalysis’s intelligence on the legitimate and illicit services that use cryptocurrency to transact.

A&D Forensics joins the program as Chainalysis’ first investigative partner in Africa, offering law enforcement customers investigatory services using Chainalysis Reactor to help identify and stop bad actors who are using cryptocurrencies for an illicit activity such as ransomware, darknet markets, scams, money laundering, and more. This comes at a time when establishing proper compliance procedures and leveraging robust investigative tools is more critical than ever, as jurisdictions around the world scrutinize the cryptocurrency industry.

“Chainalysis is dedicated to building trust in blockchains across both private and public sectors,” said Jason Bonds, Chief Revenue Officer, Chainalysis. “by partnering with A&D Forensics, we’re continuing to expand our reach into new jurisdictions and responding to the increased demand for both cryptocurrency investigation and compliance solutions.”

“Both Chainalysis and A&D Forensics are committed to promoting the safe adoption of cryptocurrencies by building trust among financial institutions, governments, and cryptocurrency businesses,” said Adedeji owonibi Senior Partner at A&D Forensics “by partnering with Chainalysis, we’re providing the African cryptocurrency ecosystem with the investigative and compliance technology that it needs to fully understand blockchain activity.”

Chainalysis maps blockchain transactions to real-world entities so that financial institutions, government agencies, and cryptocurrency businesses can detect and investigate suspicious cryptocurrency activity. By expanding into the African region, local law enforcement can increase their investigative capacity by leveraging Chainalysis Reactor, the company’s cryptocurrency investigation software; Financial institutions can vet new opportunities and navigate risks in cryptocurrency through Chainalysis Kryptos;  and by using Chainalysis KYT (Know Your Transaction), cryptocurrency businesses can monitor large volumes of cryptocurrency activity and identify high-risk transactions on a continuous basis.

About Chainalysis
Chainalysis is the blockchain analysis company providing data and analysis to government agencies, exchanges, and financial institutions across 40 countries. Our investigation and compliance tools, education, and support create transparency across blockchains so our customers can engage confidently with cryptocurrency. Backed by Accel, Benchmark, and other leading names in venture capital, Chainalysis builds trust in blockchains. For more information, visit www.chainalysis.com.

About A&D Forensics
A&D Forensics has been in the forefront of Financial and Blockchain Forensics Services helping to combat fraud within the Blockchain and Cryptocurrency ecosystem and training to law enforcement in  Sub-Saharan Africa, The firm was part of VASP Inter-Messaging working group that came out with the recent IVMS 101 standard aim at helping VASP comply with FATF travel rule, and currently working with within Global Digital Finance (GDF) AML/CFT working Group. Its Founding Partner was also recently appointed by the Security and Exchange Commission of Nigeria as a member of its Virtual Asset Regulatory Framework Drafting Committee to help bring sanity to the cryptocurrency business and safeguard the interest of Nigerians who are keen to using the emerging Blockchain Technology and the benefits it affords. For more information, visit www.adforensics.com.ng

 

Media Contact for Chainalysis:

Maddie Kennedy

Director of Communications

Maddie@chainalysis.com

 

Media Contact for A&D Forensics:

Adedeji E. Owonibi

Senior Partner – Financial Forensics

adedeji.owonibi@adforensics.com.ng

Anti-Money Laundering Services

Anti-Money Laundering Services

We help you Detect, Prevent and Comply with the Laws

 

A&D’s multi-disciplinary team of AML professionals take a holistic, risk-based approach to help organizations design, implement, and enhance all aspects of their AML program. Our practitioners provide a 360° compliance view by bringing a team of highly experienced professionals, including Certified Anti-Money Laundering Specialists, Certified Fraud Examiners, Certified Financial Crime Specialists, Chartered Accountants, former law enforcement agents, and technology specialists. Our team develops and enhances AML Compliance Programs in accordance with appropriate regulatory requirements as well as remediates existing programs that are subject to regulatory enforcement. 

Anti-Money Laundering (AML) continues to be a top priority for banks and non-bank financial institutions of all sizes. Steering clear of enforcement actions through sound risk management principles and practices while balancing internal cost control initiatives has become more challenging than ever.

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A&D will be happy to assist your organization implement a strong and robust Anti-Money Laundering procedures within your business. Compliance with AML policies and procedures is a major focus area for both local and global regulatory authorities. Firms are requested by the different regulatory agencies to set up and operate a proper system, i.e

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At A&D, we create a partnership with the people we work with. To learn more about how we can be your partner in staying compliant with anti-money laundering legislation and regulations, contact us now.