Aurora Labs manager reveals crypto fraud scheme involving OTC trades

The head of product at Aurora Labs, Matt Henderson, described a “captivating and sophisticated” crypto OTC deal, of which he nearly became a victim.

According to Henderson, a user using the pseudonym Olai contacted him via Telegram, allegedly wishing to buy a certain amount of AURORA tokens for USDC.

The parties agreed on the terms of the transaction, to be carried out via a trusted escrow. Henderson proposed the intermediary. In the correspondence he referred to him as Steve. Under this alias was the head of Aurora Labs’ security, Frank Brown.

To communicate during the execution of the transaction, Olai created a Discord group, including Henderson, the intermediary and a fourth party — his business partner Gerard.

The entire amount in AURORA was transferred to Steve, and Henderson received USDC directly. After successful test transactions, Olai wrote to him that he had sent the entire balance in the stablecoin, and the intermediary could transfer the remaining tokens.

However, the funds did not arrive, and Steve contacted Henderson via the Signal messenger, showing a screenshot of a message from him confirming the receipt of USDC.

After requesting to authorize the transaction with a link to Etherscan, the scammers sent the intermediary a new message allegedly from Henderson, proposing to return the AURORA to the specified address.

According to Henderson, the “silent business partner” Gerard copied his Discord profile and messaged the intermediary. The block feature prevented Henderson from seeing this correspondence.

As he noted, Brown (Steve) “is obsessed with security.” Henderson also offered several tips for conducting similar deals:

• Put all funds without exception into escrow accounts;
• Check transactions on a blockchain explorer and never trust words alone;
• Always create groups in chats yourself, and verify identifiers and confirmations.

Henderson believes that coordination with Brown through another channel and a prior transfer of tokens to him helped avoid another danger — scammers could have sent their own address for the transaction.

How curious… I was recently approached by an “Olai Olsen” on Telegram attempting to initiate an OTC deal and offering USDC. Same character?

— Scott Yeager (@scott__yeager) August 7, 2022

“How curious… I was recently approached by Olai Olsen on Telegram attempting to initiate an OTC deal and offering USDC. The same character?,” he wrote.

Earlier this year, victims of scammers lost more than $1 billion in cryptocurrencies, according to data from the U.S. Federal Trade Commission.

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