A cryptocurrency trader recently experienced a significant loss of nearly $70 million due to what’s known as an “address poisoning” scam. This type of scam involves the creation of counterfeit accounts mimicking the victim’s crypto address. The scammers send a small amount of currency to the victim, hoping they will later mistakenly send funds to the fake address.

How Address Poisoning Works

Blockchains, the technology underlying cryptocurrencies, are public ledgers, making it relatively easy for scammers to locate people’s crypto addresses and initiate spoof transactions to deceive unsuspecting victims.

CertiK, a blockchain security firm, reported detecting a transfer of $69.3 million worth of Bitcoin to an address linked with this form of address poisoning. As a result, the victim’s crypto wallet on Coinbase experienced a staggering loss, with assets plummeting by around 97%, leaving a balance of just over $1.6 million.

The Scammers’ Tactics

Peckshield, another security firm, revealed that the scammers converted the stolen Bitcoin into 23,000 Ethereum and subsequently transferred the funds. With Ethereum trading at approximately $3,116 per coin, the magnitude of the loss becomes even more apparent.

To safeguard against such scams, experts recommend thorough verification of addresses before executing transactions. It’s advised not to copy addresses from transaction history and to conduct small test transactions before proceeding with larger transfers.

Rising Trend of Crypto Scams

The FBI’s 2023 internet crime report highlights a trend of increasing cryptocurrency-related fraud, amounting to a staggering $3.94 billion in losses for investors in the preceding year. One particularly insidious scheme, dubbed “crypto pig butchering,” has defrauded investors of $75 million from 2020 to 2024. This scam involves building trust with victims through small payments before luring them into making significant investments, only to disappear once a substantial sum has been transferred.

The Federal Trade Commission (FTC) advises vigilance against schemes promising extravagant returns or demanding payment exclusively in cryptocurrency. Whether impersonating businesses, government entities, or even romantic interests, scammers employ various tactics to defraud unsuspecting individuals. While cryptocurrencies offer exciting opportunities, investors must exercise caution and stay informed to avoid falling victim to sophisticated scams.