Binance CEO Warns Of A New Share-Seed-Phrase Scam

A new cryptocurrency scam, dubbed the “share-seed-phrase” scheme, has risen as a serious threat to digital asset holders prompting warnings from major industry figures including Binance CEO Richard Teng.

The scam tricks users into transferring funds to supposedly “safe” wallets that are actually controlled by criminals.

Binance reports that scammers are specifically targeting users by impersonating crypto professionals and exchange representatives, using urgency and fear to manipulate victims into compromising their assets.

How the Share-Seed-Phrase Scam Works?

The scam follows a three-step process designed to create urgency and exploit users’ security concerns.

Initially, victims receive unsolicited communications, typically SMS messages or phone calls, from scammers.

They pose as Binance representatives who claim the user’s account has been compromised.

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These fake representatives create immediate anxiety by suggesting the user’s funds are at risk and need urgent protection.

The second phase involves the scammer providing a seed phrase, presented as access to a “secure wallet” where the victim should transfer their funds for safekeeping.

This reverses traditional crypto scam tactics. Instead of trying to steal the victim’s seed phrase, the scammer provides one they already control.

The manipulation relies on victims’ understanding that seed phrases are important security tools.

However, it exploits their potential lack of knowledge about how these phrases should be properly generated and managed.

The final stage occurs when victims transfer their cryptocurrencies to the new wallet, believing they’re protecting their assets.

Since the scammer provided the seed phrase, they have complete control over this wallet. Thry can immediately drain any funds transferred to it.

Essential Security Measures and Warning Signs

Binance emphasizes several critical protection strategies against this threat.

The most fundamental rule is that legitimate cryptocurrency services, including exchanges and wallet providers, never generate or send seed phrases to users.

Any message containing a seed phrase should be treated as suspicious, regardless of how urgent or official it appears.

Security experts note that legitimate seed phrases should only be generated by users themselves during the wallet creation process and stored securely offline.

Key warning signs include unsolicited communications claiming account compromise, particularly those urging immediate action.

Scammers often manipulate victims through fear, creating artificial time pressure to prevent careful consideration of their requests.

They frequently impersonate customer service representatives, claiming special authority to handle security issues.

They may also provide convincing but fraudulent documentation to support their claims.

The exchange has implemented a verification system called “Binance Verify” to help users confirm legitimate communications.

Users should exclusively rely on official channels for support, including the exchange’s verified website and mobile applications downloaded from trusted sources like the Apple App Store or Google Play Store.

Major Exchanges are Improving Security

The cryptocurrency industry’s response to this new threat has been quick and coordinated.

Major exchanges and wallet providers are enhancing their security protocols and user education initiatives.

Binance has implemented a comprehensive five-point protection strategy, emphasizing the importance of verifying all communications through official channels and never transferring funds based on unsolicited security warnings.

Platform security experts recommend a “verify-first” approach to any account security notifications.

This includes checking the authenticity of communications through multiple official channels, maintaining up-to-date contact information for security alerts, and enabling all available security features such as two-factor authentication.

Users are advised to create a security response plan before any potential incidents, including verified contact information for their exchange’s official support channels.