Key Takeaways
- Address poisoning happens when scammers make victims mistakenly send crypto to a wallet address that closely resembles the one to which they usually send funds.
- Most victims of address poisoning end up there by copying addresses from their transaction histories and sending funds without double-checking the details.
- Staying vigilant by carefully double-checking wallet addresses is the safest way to avoid scammers who use this new ploy.
Security is important in the world of crypto, and if you’ve ever sent or received cryptocurrency, you should beware of a new type of scam called address poisoning. This article explains what address poisoning is in crypto and how to protect your wallet from fraud.
Understanding Address Poisoning
When most people hear the word ‘poison,’ alarm bells ring in their heads, and they see pictures of pain, suffering, and death. Anything in the world can be poisoned; as absurd as it sounds, your crypto address can also be poisoned. Address poisoning has become one of the latest arsenals in fraudsters’ handbooks, which they use to steal coins from wallet owners. And while it may not receive as much publicity as a crypto exchange hack, it can still cause some damage when you’re the victim.
Also referred to as address spoofing, address poisoning refers to a trick where scammers send you a small amount of cryptocurrency using a crypto address that closely resembles one of the addresses you’ve used in the past. Their goal is to ‘poison’ your transaction history, hoping you could eventually copy and use the false address during future transactions. Instead of stealing your cryptocurrency directly, the perpetrators of this scam aim to prey on human error so that when you’re in a hurry, you’ll end up accidentally sending crypto to their address rather than the one you intended to:
How Address Poisoning Works
The address poisoning scam manipulates a victim into mistakably transferring their crypto coins to a fraudster’s address. The following breakdown explains how the ploy works:
Initial Poisoning
The fraudster starts the ploy by sending a small amount of crypto to the target wallet. This causes the scammer’s wallet address to be recorded in the target’s transaction history.
Address Cloning
The scammer will mainly create an address resembling a legitimate address from your previous transactions to ensure you don’t become suspicious. Cloning your address will involve copying the structure and characters of the target address so you can’t easily spot the difference.
Deception
Whenever most people want to transfer crypto or make regular payments, they mostly review their transaction histories to locate the recipient’s address. Since the address engineered by the scammer resembles one of the addresses you use regularly, you could quickly copy the scammer’s address instead of the one you intended to send funds to.
Fraudsters who use address poisoning work on the assumption that most users don’t take the time to double-check the characters of a wallet address, especially when it’s a familiar one. They exploit this standard behavior to redirect funds intended for other people to their wallets.
Risks Associated With Address Poisoning
The only time address poisoning will look harmless is when you catch a fake transaction before you send money to the wrong address. However, several risks follow the owner whenever a crypto address gets poisoned:
Loss of Owned Assets to Malicious Actors
You could quickly transfer your funds to a scammer before realizing your mistake when you fall prey to this type of scam, which will be too late since blockchain-based transactions are irreversible. Moreover, you could also transfer your assets from a centralized exchange to a poisoned wallet, believing it is your own.
Gateway to Other Cyber Attacks
Addressing poisoning resembles dusting attacks, but their intentions are different. A scammer who successfully poisons your address can exploit the opportunity in various ways, including sending you digital assets with malware or phishing sites. They may also conduct a dust attack to uncover your identity so they can begin blackmailing you. However, their goal is mainly to steal crypto coins from you or even cryptojacking, where they can secretly install crypto mining software on your computer.
How to Stay Safe from Address Poisoning Scams
Vigilance and adherence to safe practices in crypto security is the best way to stay safe from address poisoning scams. Since wallet addresses are lengthy, most people will conveniently master the first few characters for quick identification. This is the habit that scammers have come to manipulate to their advantage to displace deceptive addresses. Some of the ways you can protect yourself include:
Don’t Copy Addresses from Transaction Histories
Transaction histories can quickly truncate addresses, making it easy for scammers to exploit them. You’re safer navigating to the official source or recipient to get that correct address before you initiate a transaction.
Double-Check Every Address
Always double-check the address by comparing it directly with the official communication or website.
Use Address Book Features
Modern crypto wallets allow you to save and label the addresses you trust. If you have this feature, employ it so you can be sure that your funds went to the right recipient.
Verify Transactions
Never confirm transactions before verifying the recipient’s address. This step may seem tedious, especially when you are in a hurry, but it could save you a lot of trouble in the future.
Stay Informed
Stay informed and updated on new developments from your wallet provider and the wider crypto community. You get to learn about new scams and techniques when you talk to others who would be more informed.
What to Do When You’re Targeted
Stay alert when you notice you’re receiving small amounts of crypto in your wallet from unfamiliar addresses, as there’s every chance that someone could be trying an address-poisoning attack on you. Noticing a poisoned address in your transaction is not harmful; you only need to be careful which addresses are correct to be safe. Most importantly, don’t hesitate to contact your wallet’s customer care or crypto exchange for advice when you become suspicious.
Conclusion
The address poisoning scam fully exploits human error instead of outright hacking. And while there is no immediate threat to your assets, you could quickly make an expensive mistake. The secret to staying safe is being extra vigilant and regularly updating your wallet’s security features. By staying alert, you can protect your wallet and secure your funds.
