Approval Phishing: A New Crypto Scam That Costs Users $1 Billion

In a concerning trend, crypto enthusiasts are falling prey to a sophisticated scam known as “approval phishing,” leading to losses totaling a staggering $1 billion since May 2021, warns blockchain analysis firm Chainalysis.

What is Approval Phishing?

According to Chainalysis, approval phishing involves duping users into unknowingly approving malicious transactions on the blockchain, granting scammers unrestricted access to drain funds from victims’ wallets.

While this scam tactic can target any blockchain, it is particularly prevalent on smart contract platforms like Ethereum, where users commonly sign approval transactions to engage with decentralized applications (dApps).

Fraudsters employ various methods, such as fake dApps, fraudulent crypto apps, or even romance scams, to lure users into approving malicious transactions. Once approved, scammers swiftly move the stolen funds to a different wallet, complicating the tracking and recovery process.

Chainalysis Findings: Over 1,000 Accounts Implicated

Chainalysis identified 1,013 addresses linked to approval phishing, with some employing romance scam tactics to deceive victims. The firm highlighted that scammers maximized their revenue in May 2022, amassing a staggering $516.8 million. The most successful approval phishing address alone profited $44.3 million from thousands of victims.

To safeguard against this brand of scam, crypto users must exercise the utmost caution and vigilance when signing transactions. Verification of the legitimacy of dApps and apps is crucial, and sharing private keys or passwords should be strictly avoided. The maxim “if it sounds too good to be true, it probably is” remains apt advice in the crypto space.

Final Word

Approval phishing poses a serious threat to the crypto community, exploiting users’ trust and familiarity with blockchain transactions. As scammers continue to evolve their tactics, staying safe and smart in the crypto realm necessitates heightened awareness, skepticism, and adherence to best security practices. Stay informed, stay secure.