Changpeng Zhao, commonly known as CZ, the co-founder and CEO of Binance, has warned users about a new fraud scheme targeting the crypto community. Scammers use fake wallet addresses to deceive the target into sending money to the attacker’s address.
“I want to share this (luckily) unsuccessful, but very clever and close scam incident from yesterday. Saved $20m. Hope it may also save you one day. The scammers are so good now they generate addresses with the same starting and ending letters, which is what most people check for when doing a crypto transfer,” Changpeng Zhao wrote on August 2, 2023.
Scammers design addresses which are supposed to closely match the victim’s address. The invented addresses start and end with the same characters as the user’s actual address. It turns out that many users pay attention only to these parts of the address. As part of this scheme, users receive miniscule amounts of cryptocurrency in so-called dust transactions that are reflected in their history. According to the scammers, users are supposed to mindlessly copy their address from such transactions and thus send their money to the scammer.
On August 1, an experienced user fell for the scam and sent 20 million US dollars’ worth of assets to scammers. Immediately afterward, the user realized their mistake and asked the exchange to freeze the Tether in order to stop the assets from ending up under the control of criminals. Binance managed to help and saved the operator 20 million dollars.
A naming service for wallet addresses, for example, the Ethereum Name Service, could protect users from such a scam.
Experts suggest using more sophisticated passwords as well as two-factor authentication. They also caution users against simply copying addresses from apps when conducting any transactions. Coinbase users have also recently reported similar attacks involving the platform’s services and apps.
