175. Mic Drop: Kraken CSO Nick Percoco’s unusual anti-scamming campaign

Summary

Podcast Summary: Click Here - Episode 175. Mic Drop: Kraken CSO Nick Percoco’s Unusual Anti-Scamming Campaign

Introduction

In Episode 175 of Click Here, titled "Mic Drop: Kraken CSO Nick Percoco’s Unusual Anti-Scamming Campaign," host Dina Temple-Raston delves into the innovative collaboration between Kraken’s Chief Security Officer, Nick Prococo, and popular scam baiter KitBoga. Released on October 18, 2024, this episode explores how this duo is combating cryptocurrency scams through unconventional methods that not only frustrate scammers but also educate the public.

Scam Baiting with KitBoga

The episode opens with Dina introducing KitBoga, a YouTube personality renowned for his scam baiting tactics. KitBoga engages scammers by pretending to be potential victims, often wasting their time and infuriating them to the point where they abandon their fraudulent schemes.

• Dina Temple-Raston [00:04]: “If you spend enough time on YouTube, you may have run across this character who goes by the name Kidboga. Scammers hate him.”
• KitBoga [00:12]: “This scammer thinks I'm about to send him $455,000 worth of Bitcoin, but I typed the wrong wallet address.”

KitBoga’s strategy involves playful yet strategic interactions that disrupt scammers' operations. For instance, when scammers believe they are about to receive a substantial Bitcoin transfer, KitBoga intentionally provides incorrect information, such as wrong wallet addresses, leading to confusion and frustration.

• KitBoga [00:41]: “So if you kind of suck your thumb for a second, like a. Kind of like a baby, I'll transfer the money right away.”
• Dina Temple-Raston [00:47]: “Are you kidding me? He gets scammers so upset, they sometimes just give up on the scam altogether. Don't send it. No, don't send it.”

This method, known as scam baiting, not only thwarts the scammers but also provides viewers with entertaining content that raises awareness about common scam tactics.

Collaboration with Kraken’s Nick Prococo

Kraken’s CSO, Nick Prococo, joins forces with KitBoga to bolster their anti-scam efforts. Their collaboration began approximately a year prior to the episode's release, combining Kraken’s security expertise with KitBoga’s scam baiting prowess.

• Nick Prococo [01:29]: “We got together with him, I think, about a year ago or so, and started to help him in his. In his pursuits.”

Their joint efforts aim to disrupt scammers by engaging them actively, thereby reducing the time scammers can spend targeting potential victims.

Kraken’s Security Initiatives

Founded in 2013, Kraken has been at the forefront of cryptocurrency exchange, especially during a time when digital currencies were often associated with illicit activities. In response to the challenges faced by the industry, including the collapse of Mount Gox in 2014—which resulted in the loss of 750,000 customer bitcoins and 100,000 company bitcoins—Kraken has developed robust security measures to protect its users.

• Dina Temple-Raston [03:12]: “Nick Prococo's day job is to oversee security operations at Kraken, the crypto exchange. When the company launched in 2013, cryptocurrency was seen as pretty sketchy...”

Kraken's security tools are designed to identify and prevent fraudulent activities, particularly targeting investment scams that prey on vulnerable populations like retirees.

• Nick Prococo [04:19]: “We can help identify higher likelihood instances of someone either being scammed or maybe it's, maybe it's a fraudster trying to create an account with someone else's identities...”

Focus on Protecting Retirees

Nick highlights the alarming trend of retirees being primary targets for crypto scams, given their substantial savings and the allure of sustaining their livelihoods through investments.

• Nick Prococo [04:48]: “They may have a nest egg of, you know, a couple hundred thousand, even up to maybe $1 million...”

The FBI's 2023 cryptocurrency fraud report underscores this vulnerability, with over 16,000 complaints from individuals over 60, resulting in losses totaling approximately $1.6 billion.

• Dina Temple-Raston [05:17]: “In a recent cryptocurrency fraud report, the FBI says it got more than 16,000 crypto fraud complaints from people over 60 in 2023 alone...”

Educational Efforts and Public Awareness

Education plays a pivotal role in Kraken and KitBoga’s strategy to combat scams. By enlightening potential victims about the red flags of fraudulent schemes, they aim to empower individuals to recognize and avoid falling prey to scams.

• Nick Prococo [05:52]: “If someone's then more aware, then maybe a red flag can go off in the victim's mind...”

To further these educational goals, Nick makes appearances on KitBoga’s YouTube channel, where he portrays a comically inept Kraken customer support representative to both entertain and inform the audience about crypto security.

• Nick Prococo [06:05]: “I must be in, like, the Three Stooges.”
• Nick Prococo [06:16]: “Certainly, like, keep making mistakes and tripping on each other.”

These segments serve dual purposes: distracting scammers and teaching viewers about secure cryptocurrency practices in an engaging format.

Kraken’s Honeypot Initiative

An innovative addition to their anti-scam campaign is Kraken’s deployment of a clone website designed as a honeypot. This fake site lures scammers by presenting itself as a legitimate Kraken platform. Once scammers engage with the site, they inadvertently expose their identities and methods, providing Kraken and authorities with valuable intelligence.

• KitBoga [07:37]: “I've been working with Kraken offline for probably six months now, and their engineering and fraud team put together one of...”
• Nick Prococo [07:44]: “They're at this, like, payday phase where that scammer thinks they're going to get the million dollars in bitcoin from this, from this elderly person, for example.”

This tactic not only frustrates the scammers but also aids in their identification and eventual apprehension.

• Nick Prococo [08:10]: “We actually had a case where the criminal did everything we hoped he was going to do...”

Impact and Reach

Kraken’s collaboration with KitBoga has yielded significant results, both in terms of reducing the scammers’ operational capacity and raising public awareness through the duo’s extensive online presence. KitBoga’s combined following of nearly five million across YouTube and Twitch ensures that their anti-scam messages reach a broad audience.

• Nick Prococo [06:48]: “That's hundreds of hours that they're not spending on some other victim.”
• Nick Prococo [06:57]: “The purpose is to expose these scammers for what they're doing and bring awareness to that.”

Conclusion

Episode 175 of Click Here effectively showcases the inventive approaches taken by Kraken’s Nick Prococo and KitBoga to fight cryptocurrency scams. Through scam baiting, educational content, and technical innovations like honeypot websites, they are making significant strides in protecting vulnerable populations and disrupting malicious activities in the digital financial landscape. Their combined efforts not only frustrate scammers but also serve as a model for how collaboration between cybersecurity experts and online influencers can create impactful change.

Notable Quotes

• Dina Temple-Raston [00:47]: “Are you kidding me? He gets scammers so upset, they sometimes just give up on the scam altogether.”
• Nick Prococo [05:52]: “If someone's then more aware, then maybe a red flag can go off in the victim's mind.”
• KitBoga [07:37]: “I've been working with Kraken offline for probably six months now...”

Additional Resources

For listeners interested in continuous updates on cybersecurity news and policy, Click Here recommends subscribing to the Cyber Daily from Recorded Future News. This daily guide compiles the most significant cyber stories, ensuring that subscribers stay informed about the ever-evolving landscape of cybersecurity.

• Zoe Schiffer [09:27]: “If you're looking for a daily guide to cybersecurity news and policy, sign up for the Cyber Daily from Recorded Future News...”

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This summary was crafted to provide a comprehensive overview of the podcast episode for those who haven't listened, highlighting key discussions, insights, and the collaborative efforts to combat cybercrime in the cryptocurrency sphere.

Transcript

[Dena Temple Rustin]

If you spend enough time on YouTube, you may have run across this character who goes by the name Kidboga. Scammers hate him.

[Kit Boga]

This scammer thinks I'm about to send him $455,000 worth of Bitcoin, but I typed the wrong wallet address.

[Dena Temple Rustin]

He's a YouTube star, but he's famous for this kind of wild thing. He posts videos of himself spending inordinate amounts of time with scammers. And his schtick is this. He does everything he can to frustrate the hell out of them.

[Kit Boga]

So if you kind of suck your thumb for a second, like a. Kind of like a baby, I'll transfer the money right away.

[Dena Temple Rustin]

Are you. Are you kidding me? He gets scammers so upset, they sometimes just give up on the scam altogether. Don't send it. No, don't send it. The art of infuriating scammers until they give up or even just wasting their time has a name. It's called scam baiting. And apparently people love watching scammers get their just desserts, because Kit Boga has millions of fans, including the chief security officer at Kraken, one of the world's largest cryptocurrency exchanges. His name is Nick Prococo.

[Nick Prococo]

We got together with him, I think, about a year ago or so, and started to help him in his. In his pursuits.

[Dena Temple Rustin]

I'm Dena Temple Rustin, and this is Click. Here's Mic Drop, an extended cut of an interview we think you'd like to hear more of. And today we sit down with Kraken CSO Nick Percoco. He's joining forces with Kip Boga to do this very simple thing. Drive crypto investment scammers crazy.

[Nick Prococo]

If you just give me every third letter in number first, and then every second letter in number first, and then, you know, so on.

[Dena Temple Rustin]

Can I just read them to you normally? Stay with us.

[Michael Calore]

Hi, everyone. It's Michael Calorie, director of consumer tech and culture at Wired. Here with my colleagues, senior writer Lauren Good.

[Lauren Good]

Hello.

[Michael Calore]

And Wired contributor Zoe Schiffer.

[Dena Temple Rustin]

Hey, everyone.

[Michael Calore]

We're here to tell you about our new podcast, Uncanny Valley, a show about the people, power and influence of Silicon Valley.

[Lauren Good]

Every week, we get together to talk about how technology and culture from the Valley is influencing our everyday lives. We dig into questions like, will we ever get our privacy back? Is OpenAI for real? And how are Silicon Valley billionaires impacting US Elections? The first episode of Uncanny Valley comes out on October 31st. Listen. Wherever you get your podcasts.

[Dena Temple Rustin]

From recorded Future news, this is Click Here's Mic Drop. Nick Prococo's day job is to oversee security operations at Kraken, the crypto exchange. When the company launched in 2013, cryptocurrency was seen as pretty sketchy. It was supposed to be a great way to exchange money without going through the traditional banking system. But there had been problems. It was the currency of choice to buy drugs and guns on the dark Web. And the exchange that was handling about 70% of the Bitcoin transactions in the world, something called Mount Gox, had just.

[Michael Calore]

Gone under Bitcoin exchange. Mount Gox said it was filing for bankruptcy protection and that 750,000 of its customers bitcoins and 100,000 of its own had been lost.

[Dena Temple Rustin]

Kraken was having to work against all that bleak history. So among other things, it developed tools to make clients feel extra safe. Ways of intercepting and preventing their clients from falling for scams.

[Nick Prococo]

We can, we can help identify higher likelihood instances of someone either being scammed or maybe it's, maybe it's a fraudster trying to, trying to create an account with someone else's identities. And then when the client, the client, slash victim in this case, right, goes to try to withdraw the funds, we're able to detect if it is going to a known investment scam or if it is going to a known criminal group or if it is going to a known terrorist group.

[Dena Temple Rustin]

Even Nick said he's particularly concerned about crypto scammers targeting retirees because they're particularly ripe targets.

[Nick Prococo]

They may have a nest egg of, you know, a couple hundred thousand, even up to maybe $1 million. And their motivation is to invest this in a place that they can then sustain, you know, their income or their spending needs for the rest of their life.

[Dena Temple Rustin]

In a recent cryptocurrency fraud report, the FBI says it got more than 16,000 crypto fraud complaints from people over 60 in 2023 alone. And seniors reported the highest losses, some $1.6 billion. And that's just the people who actually reported being scammed. The actual figures are probably much higher. Nick says one way to nip all that in the bud is education to make clear that 300% guaranteed returns just don't happen. In fact, just about any guaranteed high return is probably a scam.

[Nick Prococo]

If someone's then more aware, then maybe a red flag can go off in the victim's mind. Maybe that adds up to a scam. And so I'm going to self select and stop. Stop following along with this, with this criminal group.

[Dena Temple Rustin]

Every once in a while, as part of this education effort, Nick makes an appearance on Kitboga's YouTube show. He plays the role of a hapless Kraken customer support person.

[Nick Prococo]

You know, I must be in, like, the Three Stooges.

[Dena Temple Rustin]

Were you in the Black Bottom Cafe on the night of February 13th?

[Nick Prococo]

Certainly, like, keep making mistakes and tripping on each other. And the person just. The scammer just gets extremely frustrated. And so it becomes more of, like. It's like a little bit like improv comedy, I think for their audience, the.

[Dena Temple Rustin]

Scam baiting has an immediate benefit. If scammers are on the line with Kickboga and Nick, it takes time away from their ability to scam someone else.

[Nick Prococo]

That's hundreds of hours that they're not spending on some other victim.

[Dena Temple Rustin]

But it also serves as a kind of public service announcement. Their bits on YouTube help shed more light on crypto scams and how to spot them.

[Nick Prococo]

The purpose is to expose these scammers for what they're doing and bring awareness to that.

[Dena Temple Rustin]

Kit Boga doesn't do all this for free. Kraken pays it. And while these bits are funny, the goal is serious. In fact, Nick and Kit Boga have also released a series of educational videos about things like password protection and good security hygiene as part of this broader campaign. It's a good way to get the word out. Kitboga has almost 5 million online followers between YouTube and Twitch, and a seemingly endless appetite for tormenting scammers.

[Kit Boga]

I've been working with Kraken offline for probably six months now, and their engineering and fraud team put together one of.

[Dena Temple Rustin]

Their latest projects includes a Kraken clone site that they hope will be a honeypot for scammers. The way it works is Kip Boga goes back and forth with the scammer for a while, and then when the scammer thinks he's about to get his money, Kip Boga directs him to the fake Kraken site.

[Nick Prococo]

They're at this, like, payday phase where that scammer thinks they're going to get the million dollars in bitcoin from this, from this elderly person, for example.

[Dena Temple Rustin]

They end up outing themselves, providing all the information to Kraken that the authorities will need to find them.

[Nick Prococo]

And we actually had a case where the criminal did everything we hoped he was going to do. He created an account, he verified his identity with his legit driver's license and took a selfie. And so we have information about where he was coming from, his IP addresses, all that kind of stuff.

[Dena Temple Rustin]

Kraken wouldn't say how many scammers they've done that to, or how many hours they've spent spooling scammers up, but it's clearly another way to frustrate the bad guys.

[Kit Boga]

I don't think he's very happy with our service.

[Dena Temple Rustin]

This has been Click Here's Mic Drop. It was written and produced by Megan Dietrich, Jade Abdul Malik, Sean Powers and me, Deana Temple. Rest it was edited by Karen Duffin. We'll be back on Tuesday with an all new episode of Click Here. Have a great weekend.

[Zoe Schiffer]

If you're looking for a daily guide to cybersecurity news and policy, sign up for the Cyber Daily from Recorded Future News. It serves up today's most interesting and important cyber stories from our sister publication the Record, and then aggregates all of the big cyber stories you might have missed from news outlets around the world. Just go to TheRecord Media and click on Cyber Daily to get all you need to know about the world of cybersecurity right in your inbox.