Crypto address poisoning scams drain $1.2M in March

Sophisticated crypto address poisoning scams have resulted in significant financial losses, with over $1.2 million drained from victims in March alone.

These scams, also known as wallet poisoning, involve tricking users into sending their digital assets to fraudulent addresses by mimicking their frequently used wallet addresses.

Attackers typically send small transactions to victims, making it appear as though the address is legitimate.

When users copy-paste an address from their transaction history, they might accidentally send funds to the scammer instead.

This method has been increasingly effective due to the lack of pre-transaction security measures in many automated crypto tools, which often lack built-in verification mechanisms to detect poisoned addresses.

According to Deddy Lavid, co-founder and CEO of Cyvers, the growing sophistication of attackers and the higher transaction volume during the crypto bull market are contributing factors to the rise in these scams.

Lavid emphasised that pre-transaction verification methods could prevent a substantial number of phishing attacks, as many wallets and platforms currently lack real-time screening to flag suspicious addresses before funds are sent.

Address poisoning scams have previously cost investors tens of millions, with a notable case in May 2024 where an investor lost $71 million worth of Wrapped Bitcoin to a bait wallet address.

However, the attacker unexpectedly returned the funds after facing scrutiny from blockchain investigators.

To combat these scams, users are advised to thoroughly verify wallet addresses before transferring funds and consider using whitelists to manage trusted addresses.

Additionally, enabling AI security tools can assist in detecting suspicious transactions.

Phishing scams, including pig butchering schemes, remain a significant threat to the crypto industry, with phishing attacks being the top security threat in 2024, netting attackers over $1 billion across 296 incidents.