Changpeng Zhao, the CEO of Binance took it to X and talked about a new and popular scam currently targeting the crypto community. Through this scam, fake wallet addresses are being actively used to defraud users during transactions. Under this scheme, wallet addresses are generated with starting and ending characters that mirror the ones in a user’s original wallet address. As soon as the bogus address is generated, the scammer then proceeds to send the target dust transactions that reflect upon the victim’s transaction history.
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… https://t.co/DFpdX8aNay
— CZ 🔶 Binance (@cz_binance) August 2, 2023
Similarly, if the user proceeds to copy and paste the address from one of the dust transactions, all funds would be sent to scammers. Binance CEO, Changpeng Zhao continued to explain that a well-known crypto operator became a victim of this scam on August 1, where $20 million worth of cryptocurrencies were sent to a dust address.
However, the operator noticed an error following the transaction and requested Binance to freeze the funds before they reached the scammer. Several analysts argue that the scam can be avoided by the use of a blockchain domain, such as the Ethereum Name Service.
Changpeng Zhao Saves the Day for Crypto Users
Blockchain domains are almost identical to email addresses, and these allow users to identify wallets by using regular words instead of a lengthy string of numbers and characters. However, Binance users also have the option of purchasing domains through the platform. At the same time, security specialists warn against copying and pasting addresses from applications to transfer funds. Users are also advised to use strong passwords and enable two-factor authentication.
The timely update on X managed to provide a proper heads-up to several users, and the swift action by Binance helped the crypto operator avoid a major security incident. However, it was reported that several other users were less fortunate as one of them reported sending out USDT tokens worth $20,000 to a dust address in a similar scam. Despite contacting Binance support within 20 minutes, no option was provided to freeze the funds.
Approximately 12 hours after the transaction, the funds were transferred to a crypto mixer with no chance of recovery. Furthermore, Coinbase users have also reported similar security incidents where victims have reported scams and phishing attacks related to the platform’s services and applications. This even includes the claims of scammers contacting users with the domain name of the crypto exchange.