Binance CEO warns of novel crypto scam

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Binance CEO Changpeng “CZ” Zhao has recently warned his Twitter followers about an increasingly popular scam, which has resulted in millions of dollars in losses.

In this scam, the fraudster tricks users with addresses that resemble the user’s original address, with the same starting and ending characters. After generating the mirrored address, the scammer sends “dust transactions” to the target, which appear in the victim’s history. The funds are sent to the scammer if the victim copies and pastes one of these addresses.

Spotting the deception is difficult because many wallets use “…” to hide the middle part of the address to enhance the user interface.

Zhao said an experienced crypto operator had become a victim of this scam on August 1, accidentally sending cryptocurrencies worth $20 million to a scam address. Realizing the mistake after the transaction, the operator immediately requested Binance to freeze the Tether (USDT) before the scammer could access it.

Notably, this doesn’t guarantee an immediate return of funds to the trader. The trader must fill out documents, including a police report, and wait for investigations to complete to recover their USDT.

Binance’s swift response helped one user avoid a major security incident, but others weren’t as lucky. Another user lost $20,000 worth of USDT to a similar scam despite contacting Binance within 20 minutes. Unfortunately, the funds were sent to a crypto mixer with zero chances of recovery.

For added security, experts advise against copying and pasting addresses when transferring funds and recommend using strong passwords and enabling two-factor authentication. One Twitter user mentioned cross-checking the first three and last three letters, but as Zhao said, this method no longer works.

Scams atatcking other platforms

Coinbase users have faced similar security issues, including scams and phishing attacks. Some victims have even reported scammers reaching out to them using the domain name of the crypto exchange.

On July 7, a Twitter user named Daniel Mason shared the latest incident involving Coinbase. A fraudster contacted Mason using a genuine phone number and then sent an email from a Coinbase.com domain. Afterward, Mason received a phishing text message directing him to a Coinbase subdomain URL. The scammer gathered sensitive information, including Mason’s address, social security number, and driver’s license number.

Mason noticed that the scammer sounded like a native English speaker. The fraudster claimed that Coinbase would send an email about an account breach, and shortly after, Mason received an email from help@coinbase.com. It was unknown whether the scammer had created a case on Mason’s behalf or hacked into Coinbase’s mail servers.

Mason’s story is one of many highlighting security issues with the crypto exchange. Another victim called Coinbase’s support line to verify an email about their compromised account, only to find out later that it was a hacker’s work.

In June, Atomic Wallet warned users that some of its wallets had been compromised. However, the company assured that there was an ongoing investigation to resolve the situation.

Atomic Wallet’s support team then collected user addresses for analysis as part of their risk mitigation efforts. They also contacted exchanges and blockchain analytics platforms to trace the funds and potentially block their transfers.

Mysten Labs warned the public about an ongoing scam involving Sui Wallets in May. The Web3-focused startup detected unauthorized transactions in some Sui wallets, where spam coins were being deposited. Users have been advised to be cautious when dealing with unfamiliar objects in their wallets.

One user claimed they had received a Twitter message saying they had won 1,000 SUI tokens.