According to digital wallet provider MetaMask earlier in January, a new wallet address fraud, called ‘address poisoning’ that targets careless users, is on the rise. In a series of tweets, the MetaMask team started sounding the alarm over the new scam that is now being used to drain unsuspecting users of their assets.
The scam tries to take advantage of user carelessness. The new fraud model relies on scammers deceiving users concerning the wallet addresses they send money. Due to how highly technical and tricky the fraud is, it is easy to become a victim. This article will discuss what address poisoning is, how it works and how you can avoid it.
How wallet address poisoning works
Instead of the mainstream hack that compromises a protocol’s infrastructure, address poisoning rather relies on human psychology and the mechanics of crypto transactions.
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Recall that crypto wallets usually have their own cryptographically generated address. However, those long and boring hexadecimal numbers are difficult to memorise and remember, hereby requiring the frequent use of copy and paste. This is exactly what address poisoning attempts to take advantage of.
The fraudster uses advanced software to monitor a user’s transactions and generate a “vanity” address that looks just like one of the addresses the user frequently transacts with. Then, the fraudster sends a negligible amount of money (probably $1 or less) from his vanity address, which has the same hexadecimal numbers at the start and end of the address as one of the user’s frequent transactors to the user’s address.
Below is a scenario that captures it well:
John makes regular crypto transactions with Peter, which Rahman, a scammer, becomes aware of by utilising software that monitors transfers of tokens. Rahman will then use a “vanity” address generator to create a hacker wallet address that closely matches Peter’s.
Rahman will then perform a transaction of $1 or less between John’s address and Rahman’s newly generated vanity address. This results in the ‘poisoning’ of John’s address, as Rahman’s address replaces Peter’s address in John’s transaction history. Since Rahman’s address shares the same first and last 4 digits as Peter, Rahman hopes that John inadvertently uses his address when trying to transact with Peter.
In a nutshell, Rahman has already poisoned John’s address, and he hopes that when John copies from his transaction history to conduct a transaction next time, he will copy Rahman’s fraudulent address and send funds to it.
Who can fall victim to address poisoning?
Although the fraud attempt doesn’t give scammers access to user wallets, address poisoning targets crypto users who blindly copy and paste addresses in their transaction history without a much-needed extra cross-check.
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Due to this, MetaMask warned users always to be careful and double-check their transactions before sending their balances. The firm highlighted that it would be best to check every single character of the wallet address to ensure the funds are sent to the correct wallet.
Lastly
The address poisoning scam is difficult to spot, and once the user mistakenly credits the hacker, it is impossible to reverse the transaction. The scam relies on the user’s negligence and thrives on the fact that crypto addresses are too complex for users to memorise.
Since the scam only thrives when users copy addresses from their transaction histories, it is pertinent for crypto users to refrain from using this medium to gain access to the addresses they want to send funds. The bottom line is – the scam can easily be avoided by thoroughly checking addresses before committing to transactions.