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Address poisoning is one of the devious methods that malicious actors have recently devised to defraud people of their crypto assets. In this scam, cybercriminals infiltrate users' transaction history through dummy transactions, attempting to trick crypto wallet owners into sending funds to the scammer’s address.
This article will explain what address poisoning is, how it works, and provide guidance on how to avoid falling victim to it.
Address poisoning, also known as address spoofing, is a deceptive method employed by scammers to exploit the carelessness and haste of crypto traders or wallet owners.
In this scam, the perpetrator sends small amounts of cryptocurrency through a fake wallet address that is intentionally designed to closely resemble the recipient's address or that of someone with whom the victim frequently sends crypto to.
The primary objective is to confuse the wallet owner and prompt them into inadvertently sending funds to the scammer's address.
Target Identification: Malicious actors exploit the public and transparent nature of crypto blockchains by searching and Identifying wallet addresses. As records of addresses and their interactions are usually publicly available via various blockchain explorers.
Address Generation: After picking their targets they then use a vanity address generator to create a fake wallet address closely resembling the target's or their trading partner's address.
Imagine credit:Trireme Trading
Due to the long nature of wallet addresses some users may just take note of the first/last few characters of their wallet address so scammers exploit this tendency.
Address Poisoning: They then proceed to send a small amount of crypto or NFTs to the victim's wallet address using the fake identical address they generated. The goal is to "Poison" the victim's transaction history by introducing a deceitful transaction, they usually send worthless tokens.
The Sting: Subsequently, the scammers anticipate that when the victim is about to engage in a transaction, whether sending or receiving funds, the victim will carelessly not notice the difference due to the similarities in both addresses.
Here are some ways to avoiding falling victim to address poisoning scams:
Double-check Address
Take your time and patiently check the address you are about to send cryptocurrency to. Remember the fake addresses are similar but not the same so you are definitely going to spot the difference.
Save Frequently Used Addresses
These days users can save addresses they frequently interact with, the goal here is to avoid copying addresses from transaction history as much as possible.
Use A Name Service
Name service addresses are harder to duplicate because they are shorter and more recognizable. Some common name service addresses are Ethereum Name Service (ENS) and BSC Name Service (BNS).
Test Transactions
Consider doing a test transaction by sending a very small amount and verify if it is successful before proceeding. Doing this will ensure that you are interacting with the right wallet address and in the event that it is the address of a fraudster you will escape losing a significant amount of your asset.
The most crucial method of preventing the address poisoning scam is to be aware of it. Vigilance is key in identifying and avoiding falling victim to this scam. The first step in this process is to be aware of the scam itself, ensuring that you do not let your guard down.
Congratulations on reading up to this point; you are now officially in the 'know.'
The web3/crypto space is sometimes compared to the Wild West. Apart from price swings, fraudsters, hackers, and malicious actors operate with anonymity, and their actions have led to catastrophic losses of funds for projects and users. Therefore, never take security for granted. Go ahead and contact Hashlock, Australia's leading blockchain and smart contract security firm, for all your web3/crypto security needs.
[Author’s Note: This article does not represent financial advice, everything written here is strictly for educational and informational purposes. Please do your own research before investing.]
Author: Godwin Okhaifo
