A cryptocurrency trader has reportedly fallen victim to a sophisticated “address poisoning” scam, resulting in the loss of tens of millions of dollars.
Address poisoning is a type of fraud where scammers create fake accounts that mimic their victim’s online crypto address. They then send a small amount of currency to the victim, hoping that the victim will later accidentally send money to the fake address, according to crypto trading service Transak.
The public nature of blockchains makes it easy for scammers to find people’s crypto addresses and launch these phishing attacks. CertiK, a blockchain security firm, detected a transfer of $69.3 million worth of Wrapped Bitcoin (WBTC) to an address linked to address poisoning. The victim’s crypto wallet now shows a 97% loss in assets, with the account value plummeting to just over $1.6 million.
Our system has detected a transfer of 1,155 WBTC (~$69.3m) to an address linked to address poisoning
EOA 0xd9A1 mimicked a transfer of 0.05 ETH which led the victim to send the funds to the wrong address
Stolen funds are here https://t.co/m2xpJW0QIZ pic.twitter.com/PWFhEsEN2G
— CertiK Alert (@CertiKAlert) May 3, 2024
Peckshield, another security firm, revealed on X that the scammers exchanged the stolen Bitcoin for 23,000 Ethereum before transferring the funds. Ethereum is currently trading at $3,116 per coin, according to The Daily Hodl.
To prevent falling victim to address scams, hardware wallet producer Trezor recommends double-checking every address before sending a transaction and avoiding copying addresses from transaction history when transferring funds. Sending a small test transaction before making a large transfer is also an effective way to verify the address.
Cryptocurrency-related scams are becoming increasingly prevalent, with the FBI’s 2023 internet crime report highlighting that crypto-related frauds cost investors $3.94 billion last year. This accounts for more than three-quarters of the year’s investment scam losses.
The rise of pig butchering scams
One particularly concerning trend is the rise of “pig butchering” scams, which cost investors $75 million between 2020 and 2024. In these scams, criminals build trust with victims through wrong-number texts, send small payments, and lure them into making fake crypto investments before disappearing once the victim has sent a substantial amount of money.
At the end of last year, United States authorities were able to recover about $500,000 worth of assets lost to pig butchering scams. In mid-March, Massachusetts prosecutors also took some steps to return $2.3 million worth of digital assets seized from fraudsters to pig-butchering scam victims.
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