Cryptocurrency traders have reportedly lost tens of millions of dollars in a so-called “address poisoning” scam.
According to cryptocurrency trading platform Transac, address poisoning scams work by creating fake accounts for a victim's online cryptocurrency addresses and using them to send small amounts of currency to the victim in the hope that the victim will later accidentally send money to the fake address.
Because the blockchain is public, it's easy for scammers to find people's cryptocurrency addresses and send fake transactions to scam their victims.
Blockchain security company CertiK Post to X The company said it had detected $69.3 million worth of Bitcoin transfers to addresses “related to address poisoning.”
The victim's cryptocurrency wallet currently shows that approximately 97% of their assets on Coinbase have disappeared, with the account now valued at just over $1.6 million.
Another security firm, PeckShield, wrote to X that the scammers had exchanged the stolen bitcoins for 23,000 Ethereum, which is trading at $3,116 a coin, according to Daily Hoddle, before transferring the funds.
Trezor, another cryptocurrency trading platform, recommends double-checking all addresses before sending a transaction to avoid address fraud, and not copying addresses from your transaction history when transferring funds.
According to the company, sending small test transactions is also an effective way to verify an address before making a larger transfer.
Cryptocurrency-related scams are on the rise, according to the FBI's Internet Crime Report for 2023. The report said cryptocurrency-related scams cost investors $3.94 billion last year, accounting for more than three-quarters of investment fraud losses this year.
According to one study, cryptocurrency “pig slaughter” scams cost investors $75 million in losses between 2020 and 2024. The scam begins with criminals sending wrong-number text messages as a way to build trust with their victims.
Scammers send victims small payments to lure them into making fake cryptocurrency investments, then cut off contact once the victim has sent a larger amount of money to the perpetrators.
The name of the scam refers to fattening pigs before slaughter.
According to the Federal Trade Commission, most cryptocurrency scams are perpetrated by scammers who try to get unrelated victims to pay in Bitcoin to avoid being traced to their crimes.
The best way to spot cryptocurrency scams is to never trust anyone who only accepts payment in cryptocurrencies or promises big profits on dodgy investments, the agency said.
“Investment scams are one of the most common ways scammers trick people into buying cryptocurrency and sending them money,” the FTC said. “But scammers also use other tactics, such as impersonating businesses, government entities, or romantic interests.”