Friend.tech, the newest way to make money off your friends!

"Due to a SIM-swap attack on Friends.tech accounts, a scammer makes off with $385.000 worth of Ether", reports Cointelegraph on 5 October 2023. Of course that is awful, but also a valid reason to inform you about new trends and risks in the world of Cryptocurrency.

What is Friend.tech and Web3?

Friend.tech was the topic of conversation this summer in the cryptoworld. An "invite-only" mobile app linked to X (Twitter) that allows you to make money off your friends! This is one of the latest developments in the Web3 Social domain. Web 3 stands for the decentralized Internet in which the user has control over his own data. We come from the Web 2 era, characterized by social media tech giants such as Facebook and Youtube. Users started creating content themselves, the companies own that data and sell it to serve you personalized advertisements. Web3 is set up in such a way that the layer of companies in between is no longer necessary. You probably recognize this decentralized philosophy from crypto such as Bitcoin. This set up can also be applied to social media. There is money made, however the proceeds are for the user himself. The privacy aspect in Web3 is also important. You decide which information you want to share with whom and the rest remains schielded/ protected.

How does Friend.tech work?

Friend.tech is a fine example fo such a Web3 Social app. How does that work? If you are one of the lucky ones, you received an invite code for friend.tech via via. Each friend.tech user gets three invite codes to share. You install the mobile app and link it your X account. Most people drop out here - and rightly so - because such a link obviously comes with risks. But let's assume you take the risk. You activate your account and buy your own "Genesis key", to be paid with Ethereum crypto. Now you can buy keys from others on the platform and they can buy your keys. You can view keys as shares. At first they were actually called Shares, but given the recent discussion about whether crypto can be seen as securities, they quickly replaced this term. The keys provide access to the person, which can take many forms. For example, if it concerns an expert such as a successful crypto trader, often you can send direct messages to that person and you will receive a quick answer to your investment questions. It could also be a musician, in which case it can include access to a relatively small group chat and experience pre-releases of new songs, for example. These are two obvious examples, but the possibilities are enormous. I'm thinking of an account for my ambitious daughter who wants to become a heart surgeon, she can create a kind of fan base here of family and friends who believe in her and want to support her, in exchange for updates on her studies and medical advice. What this is about is making meaningful connections and at the same time making money from these social relationships. The musician can get paid for his creations, but this goes further than that. The key holders also benefit if their musician friend becomes very popular due to supply and demand. Imagine a musician that you already spotted when he was still performing in the neighbourhood cafe for an audience of three. You knew there was potential in this and immediately purchased a key from him, and then a year later you can benefit from his success because the price of the keys has risen.

Growth and its side-effects and risks.

The friend.tech platform now has 706,994 users, $21.7 million in turnover and popular keys cost $5.000. Toch is het nauwelijks mogelijk niet te gaan nadenken over de minder leuke mogelijkheden van dit platform. Yet it is hardly possible not to think about the less pleasant opportunities this platform offers. There are of course always users who have no interest in the content, but are attracted by the speculation options, as the value of the keys is very volatile. If something is booming on social media, you can make a lot of money from it. Similar to the speculation happening on the traditional securities market. Another risk is that X (former Twitter) is full of bots, what are they going to do? There is no mechanism yet to verify whether the X account is "human". And what think of prior knowledge: Your "real friends" know you are making a career change and might sell their keys before the rest. But wait, what if your friends sell their keys, does that mean they don't like you anymore? And what if your keys end up in a "pump and dump", where a group of owners decides to buy together and sell en-masse when the price reaches a certain peak? If your keys drop in price, are you suddenly no longer an expert? What if the athlete friend dies? Do the keys then become worthless or more valuable? The first keys are very cheap, but as more people buy, the price quickly increases, plus those 3 invites that you can give away... In any case it is interesting to see what happens as in Web3 the user is central. You are in charge of your data, you decide who you share what with and you make money from your data.

SIM-swap

Back to the news item. Even more is happening here. In a short time, friend.tech has become very popular and extremely hyped on Web2 social media, the key prices have risen significantly. Which attracts hackers awaiting the right opportunity to strike. Especially with new apps that are hyped via social media, there is a good chance that the users are not very "tech savy". Four users appear to have been misled with a SIM swap. With a SIM swap, your telephone number is, as it were, hijacked. The attacker manages to convince your mobile phone provider that there is a problem with your SIM card and that a replacement SIM card needs to be activated. Read here more about how to prevent this. When the activated SIM card is in the attacker's possession, he can take over online accounts, including X and friend.tech. He can then send the Ethereum in the wallets to his own address and transfer it further to cover his tracks as much as possible..

How can DataExpert help?

Money gone, you might think. That is not entirely true. It is quite possible to track stolen funds on the blockchain, because all transactions are public and permanently recorded. At DataExpert we also conduct similar studies. Using analysis tools (Chainalysis and TRM), we can in a number of cases continue to monitor the funds while they are being transferred. If such a trail leads to a centralized crypto exchange, the place where you convert crypto into fiat money (euros, for example), the police can submit a request for information there, because these companies generally have a copy of their customers' IDs because they are obliged to do so.

Have you also fallen victim to fraud and paid in crypto? Please feel free to contact us at crypto@dataexpert.nl.

About the author: Anje Roosjen (in addition to being mother of a teenager) has been a crypto researcher and crypto trainer at DataExpertBV since 2023.

Disclaimer: This piece is not investment advice or financial advice, it has no recommendations on buying, selling or holding cryptocurrencies.