A cryptocurrency trader has reportedly fallen victim to a sophisticated “address poisoning” scam that resulted in a loss of tens of millions of dollars.
Address poisoning is a type of fraud in which scammers create fake accounts that mimic their victim’s online crypto address. They then send the victim a small amount of money in the hope 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 fraudsters to find people’s crypto addresses and launch these phishing attacks. CertiK, a blockchain security company, discovered a transfer of Wrapped Bitcoin worth $69.3 million (WBTC) to an address associated with address poisoning. The victim’s crypto wallet now shows a 97% asset loss, with the account value dropping to just over $1.6 million.
Our system detected a transfer of 1,155 WBTC (approximately $69.3 million) to an address associated with address poisoning
EOA 0xd9A1 faked a transfer of 0.05 ETH, which resulted in the victim sending the funds to the wrong address
Stolen funds can be found here: https://t.co/m2xpJW0QIZ pic.twitter.com/PWFhEsEN2G
– CertiK Alarm (@CertiKAlert) May 3, 2024
Peckshield, another security company, revealed on X that the scammers exchanged the stolen Bitcoins for 23,000 Ethereum before transferring the funds. According to The Daily Hodl, Ethereum is currently trading for $3,116 per coin.
To avoid falling victim to address fraud, hardware wallet manufacturer Trezor recommends double-checking each address before sending a transaction and avoiding copying addresses from transaction history when transferring funds. Sending a small test transaction before a large transfer is also an effective way to verify the address.
Cryptocurrency-related scams are becoming increasingly common. The FBI’s 2023 Internet Crime Report indicates that cryptocurrency-related scams cost investors $3.94 billion last year. This accounts for more than three-quarters of the year’s losses from investment fraud.
The rise in pig slaughter fraud cases
A particularly concerning trend is the rise of “pig slaughter” scams, which cost investors $75 million between 2020 and 2024. In these scams, criminals build trust with victims by texting fake numbers, sending small payments and tricking them into making fake cryptocurrency investments before disappearing once the victim has sent a significant amount of money.
Late last year, U.S. authorities were able to recover about $500,000 worth of assets lost to pig slaughter fraud. In mid-March, Massachusetts prosecutors also took steps to return $2.3 million worth of digital assets seized from fraudsters to pig slaughter scam victims.