Crypto Whale Loses $4.46 Million in Elaborate Phishing Scam

Updated: 21 September 2023

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A crypto whale has lost $4.46 million in a phishing scam when USDT was illicitly transferred from the owner’s wallet on Kraken to a scammer’s wallet.

Crypto Scammers Strike Again

The scam was flagged by PeckShield, a blockchain security company, which labeled the address ending in “ACa7” as a phishing scammer’s address. Soon after, Scam Sniffer, a blockchain scam platform, added information about the incident, revealing that the funds were routed to an address connected to a “fake Coinone crypto mining exchange.”

#PeckShieldAlert The address 0x2175…f7D9 got scammed for 4.46M $USDT
Victim's address: 0x2175c0082d052872501f7fe54e1aC59858aaf7D9
Scammer's address: 0xAbb07822F471773Ff00b9444308ceEB7cf0dACa7 pic.twitter.com/Ny9CIrkBxw

— PeckShieldAlert (@PeckShieldAlert) September 21, 2023

Although the specifics of how the scam was carried out are still being investigated, the huge amount at stake highlights the sophistication employed by the cybercriminals.

Phishing has become a common approach to scamming as more people are becoming vigilant against other methods. Based on data from a Dune Analytics dashboard, scammers have used phishing and other similar methods to steal a total of $337.1 million USDT from as many as 21,953 victims since September 2021.

According to the Global Anti-Scam Organization, victims of this particular approval mining scam are frequently duped into approving limitless withdrawals from their cryptocurrency wallets.

“When you create a self-custody crypto wallet […] you obtain a ‘private key’ that is safeguarded through encryption. However, the fraudsters do not need your seed phrase,” GASO said. Explaining on its website, GASO stated that when a victim clicks the link to join the phony mining pool, they’re clicking on a button that will seek a $10–$50 network charge in Ether.

While this amount might seem reasonable, GASO suggests it is to trick the user. “This is merely a front to obtain your digitally signed authorization, allowing unlimited access to your wallet via the USDT smart contract.”

Phishing Scams: A Rising Threat

It’s vital to note that phishing schemes might rank as the fourth most popular kind of fraudulent method by the end of the year.

This incident follows a similar one that took place earlier in September where a crypto whale lost a staggering $24 million worth of various crypto assets from their Ethereum wallet to a phishing scam. This was registered as one of the biggest individual crypto thefts caused by the phishing attack to date.

User lost $24.23 million in #cryptocurrency due to phishing

An unknown user lost $24.23 million (4850.9 rETH and 9579.2 stETH) as a result of phishing.

The wallet owner confirmed several transactions and the increaseAllowanse function, which gave the attacker access to the… pic.twitter.com/00cDw99evd

— Iren Barnes (@IrenCryptoQueen) September 7, 2023

The stolen assets comprised 9,579 Lido Staked ETH (stETH), valued at around $15.6 million at the time, and 4,851 Rocket Pool ETH (rETH), valued at approximately $8.5 million.

Given the rise of phishing scams both in the number of incidents as well as the magnitude of loss, authorities and organizations alike are advising cryptocurrency users to adopt strong security precautions. These include protecting private keys, exercising caution when responding to unwanted offers or demands for personal information and even conducting extensive research before choosing to join phony crypto schemes.

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