Binance CEO Changpeng 'CZ' Zhao recently took to social media to warn his followers about a deceptive and increasingly popular scam that has cost victims millions of dollars, Cointelegraph reports.
This scam involves fake wallet addresses and cleverly disguised dust transactions, luring unsuspecting users into losing their hard-earned funds.
The Scam
In his cautionary message on X (formerly Twitter), CZ highlighted how scammers generate addresses that mimic the victim's original address.
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.
— CZ 🔶 BNB (@cz_binance) August 2, 2023
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
According to the CEO, They use the same starting and ending characters to trick users into thinking it is a legitimate address. To make matters worse, many crypto wallets hide the middle part of the address with "..." for a better user interface, making it even harder for users to spot the deception.
The scammers then send small dust transactions to the victim's wallet, which displays the fraudulent address. When the user attempts to make a legitimate transaction and copy-pastes an address from one of these dust transactions, the funds end up being sent straight into the scammer's wallet-a cunning trap.
Advanced Modus Operandi
Even experienced crypto operators are not immune to this scam.
CZ tells his followers that a well-experienced crypto operator recently fell victim to this ploy, losing cryptocurrencies worth an astounding $20 million. Fortunately, a fast reaction and timely intervention from Binance helped prevent a total disaster.
The user noticed the error right after the transaction and requested Binance to freeze the Tether before it reached the scammer. This fortunate turn of events saved the user's funds from leaving the platform.
Read Also: Bybit's World Series of Trading 2023 Will Be an All-Star Showdown for Elite Crypto Traders
Possible Safety Nets
Cointelegraph notes that one way to protect oneself from this trap is by utilizing blockchain domains like the Ethereum Name Service (ENS).
Blockchain domains function similarly to email addresses, allowing users to identify wallets using regular words instead of long strings of random characters.
Binance users can conveniently purchase these domains through the platform, providing additional protection against scammers.
Security Best Practices
Security specialists strongly recommend certain best practices to avoid falling victim to such scams.
Firstly, users should refrain from copying and pasting addresses from applications when transferring funds. Instead, they should manually type in the recipient's address to minimize the risk of copying an incorrect one.
Secondly, using strong and unique passwords for crypto accounts and enabling two-factor authentication (2FA) on applications is vital to add an extra layer of security.
Crypto Scams on the Decline
Despite the increasing sophistication of scams, there is a glimmer of hope. Reports suggest that crypto scam revenue fell significantly in 2022, decreasing from $10.9 billion the previous year to $5.9 billion.
This decline might be attributed to better awareness and education among users and improved security measures implemented by various platforms.
Stay posted here at Tech Times.
Related Article: Crypto Scams Plunge 77% to $1.1 Billion in 2023, but Ransom Attacks Surge by 62.4%
