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Crypto Wallets Under Siege

Navigating the crypto space could be a tricky venture, especially with the increasing scammer tactics that threaten your crypto wallet's security.


Inside the Scammers' Lair: 7,905 Fraudulent Blockchain Wallets Identified

In May alone, at least 7,905 blockchain wallets were detected as conduits for swindling funds from unsuspecting crypto users, according to Forta Network, a blockchain security firm. Forta, who recently introduced its token, has a network of bots designed to unearth various scams across multiple blockchains such as Ethereum, Binance Smart Chain, Polygon, Optimism, Avalanche, Arbitrum, and Fantom.

Harnessing Technology to Outsmart Scammers

Cristian Seifert, a researcher at Forta and former Microsoft security research division staff, shared with CoinDesk that the company's algorithms have been tuned to recognize various forms of anomalous behaviors during blockchain transactions. This includes a range of attacks targeting users' wallets, some of which exploit social engineering techniques and others that just need a victim's wallet address.

Decoding the "Ice Phishing" Attack: A Trojan Horse in Crypto Transactions

The so-called "ice phishing" technique, a rampant scamming method that accounted for 55.8% of all May's registered attacks by Forta, poses a significant threat. Unlike conventional phishing that seeks users' private data, ice phishers trick victims into signing malicious blockchain transactions, giving them access to drain the victims' wallets. These scams bank on "token approval" transactions, a common feature of non-custodial Web3 wallets that allows users to authorize smart contracts to access their wallets.

The Danger in Decentralized Applications: How Attackers Trick Users

Attackers often mislead users into engaging with various decentralized applications (DApps), including decentralized exchanges (DEXs). They create an illusion of lucrative opportunities, like token airdrops, exploiting users' fear of missing out (FOMO). Instead of dealing with legitimate services, users unintentionally surrender control over their assets to attackers by approving token transactions.

NFT Trading Exploits and Address Poisoning Tactics

Scammers also target non-fungible token (NFT) traders by leveraging quirks in NFT infrastructure like the Seaport protocol. In an "address poisoning" attack, attackers scrutinize the transaction history of their victims' wallets and design blockchain addresses that look familiar to their targets. They then send the victims a negligible value transaction, intended to disrupt their transaction history, leading to potential missteps in future transactions.

Bitcoin and Wallet
Bitcoin and Wallet

Simple exploits often yield results for scammers. For instance, the fraudulent tLINK token targeted Chainlink (LINK) holders by promising an exchange for actual LINK tokens on a phishing website. The scams can get more complicated when attackers allocate fraudulent ERC-20 tokens to legitimate smart contracts, making it seem as if users received an airdrop from a legitimate contract when in reality it's a scam.

Protecting Your Crypto Wallet: Emphasizing Transaction Hygiene

As scammers get craftier, the importance of being attentive to wallet transactions becomes paramount. Forta provides its database of fraudulent addresses to the ZenGo wallet, assigning risk scores to blockchain wallets based on their potential involvement in scams.