Cointime

Download App
iOS & Android

Exploring the Nuances of Address Poisoning

Validated Media

The world of crypto-crime is ever-evolving and just a month into 2023, a new crypto scam is on the rise. Known primarily as address poisoning, but also referred to as address spoofing, this scam has already prompted a consumer alert from a major cryptocurrency wallet, MetaMask, to its users on Twitter.

According to MetaMask, after a customer sends a normal transaction a scammer will send them a token transaction worth nothing or a nominal value, effectively “poisoning” or tainting the entire transaction history. Instead of using a normal wallet address that is automatically generated, the attacker will use a custom-made vanity address closely resembling the one belonging to the user. Attackers often duplicate four or five of the beginning and ending characters using an open-source tool like Profanity. The attacker is hoping that the user will mistakenly copy their vanity address, instead of the user’s actual address, for future transactions.

How Do Address Poisoning Scams Work?

The address poisoning scam works as follows.

First, attackers monitor the blockchain to look for regularly active wallet addresses. By doing so, they can generate a shortlist of addresses to attack - sparing them the hassle of attacking dead, dormant, or secondary wallet addresses. Targeting addresses in this way is critical as the marginal cost of each attack isn’t zero, as attackers still have to pay network fees when spoofing an address.

These scammers rely on the fact that it is not practical for people to memorize a wallet address. Variably composed of either alphanumeric characters as in the case of BTC or hexadecimal characters as in the case of ETH (which generates them cryptographically), they are typically very long. A Bitcoin wallet address, for example, ranges from 26 to 35 characters, while a MetaMask wallet address is 42 characters.

Given how difficult it is to commit a full address to memory, people rely on mental shortcuts for validation. For instance, someone may only scan the first and last letters of an address to check if it’s correct. Using this technique, it would be hard to differentiate between:

0xC660DC4250C4F07cF780cBf0c897nHQPLN123Bn0 (a hypothetical user address)

and

0xC660EL1NDZK8L69cP9LKdRZNd213wPOX9T523Bn0 (a spoofed vanity address)

It may be easy for you to distinguish the two addresses because you have been primed to find a difference, but to someone rushing to complete a transaction, they may seem close enough to avoid drawing suspicion.

Because users cannot remember addresses in their entirety, the scammer can easily create similar-looking vanity addresses to fool users. In practice, it’s very similar to how cyber criminals spoof banking websites like Wells Fargo hoping to capture unsuspecting victims’ login credentials.

Second, scammers then execute the process of poisoning or modifying a person’s transaction history by sending them a very small or negligible amount of cryptocurrency.

Third and finally, users then copy and paste the address from their transaction history when it’s needed for other transactions. If a user is unknowingly copying and pasting a poisoned address, it may be a while before the user even notices that something is wrong. Funds may be inadvertently sent to the spoofed address on multiple occasions.

Unfortunately, there’s no complex explanation for why this happens: people are lazy. Rather than grab their wallet address from its address book, they will grab it from where it is most readily available, which is commonly their transaction history. The poisoning scam succeeds because it takes advantage of human psychology and behavior, which indicates that people will follow the most convenient path.

While MetaMask may be the biggest brand to warn about address spoofing, it is not alone. Ledger, which manufactures hardware wallets, also noted the rise of this scam. While Ledger gave advice on how to prevent falling victim to address poisoning with any Ledger product, they noted that the scam could happen on any blockchain. It theorized that attackers would prioritize blockchains where network fees are cheap, such as Polygon, Tron, or Binance.

Some platforms may even be unintentionally facilitating this scam. To improve their user experience, some platforms and wallets provide wallet address shorteners that visibly compress the address in some way, such as by only showing the first five and last five characters. This feature increases the chance of address poisoning succeeding. Instead of relying on users to overlook the middle characters, a vanity address and a shortened address can now appear indistinguishable from one another. With the advent of address poisoning, any wallet or platform that offers address shortening should consider discontinuing the feature to better protect users from scammers.

How Can We Prevent Address Poisoning from Succeeding?

To best combat the rise of address poisoning across wallets and blockchains, it’s important to distinguish this scam from similar schemes, such as dusting attacks. As with address poisoning, a dusting attack relies on sending a negligible amount of cryptocurrency to different wallet addresses. But this is where the resemblance ends, and the goals diverge. The intent of address poisoning is to mimic the person’s address so that the conflation of wallet addresses results in funds mistakenly being sent to the poisoned address. The purpose behind a dusting attack is almost the opposite: de-anonymizing the recipient by watching how funds are spent, so they can possibly be identified. Once identified, the attackers may escalate the attack by blackmailing the de-anonymized user, trying to extort them, or targeting them for phishing.

Address poisoning more closely resembles a common variation of spear phishing, a scam where attackers create similar-looking email addresses to one that the target regularly works with. If the target uses [email protected], the attacker may send an email from the address [email protected], much, in the same way, crypto scammers create vanity addresses. From there, the spear phisher will send an email requesting payment for overdue services and provide a bank account. The method of both address poisoning and spear phishing is nearly one and the same: combine people’s carelessness with digital mimicry so funds end up in the wrong hands.

As with spear phishing, there are several ways to combat address poisoning, which have already made the rounds amidst these early warnings.

  • Double-check the address. If the user has a known location where they previously stored the wallet address, such as an offline document, they can double-check that every character matches. While this cross-referencing may be accurate, it can be tedious.
  • Source the original address. This will be product-specific, but there should be a location where users can access their addresses. On Ledger, users are encouraged to refer to the address on the receive button in “Ledger Live” on their Ledger device - if the addresses do not match, users are advised to cancel the transaction. For other software or hardware wallets, users should consult the documentation to ensure they are getting the wallet address from the correct location.
  • Use an address book. On MetaMask, users can input and confirm a specific address through the Address Book feature, which cannot be changed by any attackers attempting address poisoning. Most major wallets, such as Binance and Coinbase also offer this feature, which users should take advantage of.
  • Keep funds in a cold wallet or hardware wallet. Users can also elect to keep some of their cryptocurrency in a cold wallet, as suggested by Binance. Cold wallet storage can even be paired with a test transaction, whereby a user sends a small amount and waits for it to be confirmed, before executing the full transaction. The caveat is that there have been some reports of cold wallets also falling victim to address poisoning. Another option is the use of a hardware wallet, which are devices that secure a user’s keys offline. Because any transaction must be signed with the private keys that match the wallet, it would be nearly impossible to send funds to the wrong wallet as part of an address-poisoning scam.
  • Leverage forensic analysis. Just as proof-of-reserve emerged as an innovation to prove whether exchanges really have ownership over said funds, other cryptographic or forensic techniques may arise that combat address poisoning. Some methods may include the ability to better track the creation of the vanity addresses at the center of these scams and the flow of funds in and out of any associated wallets.

The story around address spoofing is still developing, and if you’re interested in seeing how this develops please look out for our next piece in the address spoofing series, as well as in our upcoming Hackhub report. Stay tuned until then and watch your wallet addresses closely!

Read more: https://blog.merklescience.com/general/exploring-the-nuances-of-address-poisoning?

Get the latest news here: Cointime channel — https://t.me/cointime_en

Comments

All Comments

Recommended for you

  • Xinjiang launches special campaign to combat illegal fundraising, with key areas including virtual currency, blockchain, etc.

    According to Chang'an Xinjiang Public Account, Xinjiang Autonomous Region and Corps have launched a joint special action to crack down on illegal fund-raising, with key areas including third-party wealth management, fake private equity, fake gold exchange and other traditional fields, as well as emerging fields such as virtual currency, blockchain, cultural tourism, film and television investment, and debt resolution services. It is reported that key cases include cases involving more than 100 million yuan and cases that have been criminally filed for more than five years.

  • A British court has postponed the final sentencing of Wen Jian, a British-Chinese national involved in the country's largest Bitcoin money laundering case, until May 24.

    On May 11th, it was reported that Jian Wen, a 42-year-old British Chinese citizen, was found guilty of "participating in arranging money laundering" in the UK's largest Bitcoin money laundering case. He could be sentenced to up to 14 years in prison. Jian Wen's defense lawyer, Mark Harries, stated that due to the judge's busy schedule, the UK court has postponed Jian Wen's final sentencing, which was originally scheduled for May 10th, to May 24th.

  • Web3 startup Star Nest completes $6 million in Pre-A round of financing

    Hong Kong Web3 music startup Star Nest announced that it has completed a $6 million Pre-A round of financing, led by Chuangqi International Limited, a wholly-owned subsidiary of Hong Kong Stock Exchange-listed company Guofu Innovation. Star Nest will collaborate with Armonia Meta Chain to develop the Star Nest SpaceStar metaverse game, which includes music, role-playing, and social features.In addition, Star Nest plans to launch its NEST project in the third quarter of 2024. Nest will receive 2.1 billion NEST tokens tailored for the project, and Star Nest will use the NEST token to build a more complete music industry token economic system. The NEST token will be widely used for purchasing performance tickets, chain game cooperation, metaverse consumption, governance voting, and other activities.

  • Over $594 million worth of PYTH is staked

    According to Dune data,  there are currently 1,201,167,362 PYTH tokens in the staked state, with a total staked value exceeding $594 million. The number of PYTH stakers has reached 151,211.

  • US Department of Justice: Tornado Cash indictment has nothing to do with "free speech"

    On May 11th, the US Department of Justice explained why the motion to dismiss the criminal case against Tornado Cash founder Roman Storm was invalid. The Department of Justice reiterated that their indictment was not related to whether the Tornado Cash computer code had freedom of speech or was protected by the First Amendment of the Constitution. The defendant was not charged for publishing computer code, but for using it to facilitate profitable illegal activities.

  • USDC circulation decreased by $100 million in the past week, with a total circulation of $33 billion

    According to official data,as of May 9th, Circle has issued approximately $2 billion USDC and redeemed approximately $2 billion USDC in the past 7 days, with a decrease in circulation of approximately $100 million. The total circulation of USDC is $33 billion, with a reserve of $33.1 billion, including approximately $3.3 billion in cash and Circle Reserve Fund holding approximately $29.8 billion.

  • SEC rejects Coinbase's request for appeals court ruling on cryptocurrency rules

    The US SEC has rejected Coinbase's request to appeal to the court to review whether traditional securities rules are applicable to cryptocurrencies. In its application, Coinbase stated that it hoped the appeals court would consider whether the Howey test, which has long been used for securities evaluation, should be applied to digital assets. However, the SEC pointed out that Coinbase has not successfully demonstrated the need for such an evaluation. The SEC stated that Coinbase is attempting to create a "new legal test," but this attempt was rejected by the court. The court found that Coinbase's arguments lacked consistency and did not successfully demonstrate the existence of decisive issues. Currently, the judge responsible for hearing the SEC's case against Coinbase will make a ruling on Coinbase's intermediate appeal motion.

  • Colombian President Suspected of Accepting $500,000 in Illegal Crypto Donations

    Colombian President Gustavo Petro is suspected of accepting over $500,000 in digital token donations from a fraudulent cryptocurrency project during his 2022 election campaign. A former contractor revealed that the illegal donation occurred during a meeting in February 2022 that discussed the advantages of cryptocurrency and the possibility of working with the government. This allegation is one of the latest charges faced by President Petro during his election campaign, with the Colombian Prosecutor's Office investigating his campaign last year.

  • Fed's Kashkari: The bar for another rate hike is high, but it cannot be ruled out

    The Federal Reserve's Kashkari expressed a cautious attitude towards restrictive monetary policy; he is adopting a wait-and-see attitude towards future monetary policy; he is in a wait-and-see state to see if inflation is stagnating; the threshold for raising interest rates again is high, but this possibility cannot be ruled out; if inflation data supports it, the Fed will maintain interest rates.

  • The address that defrauded 1,155 wBTC has returned more than 96% of the funds to the victims

    Blockchain data shows that the address poisoning attacker lured users to send 1,155 Wrapped Bitcoins (wBTC) (valued at $68 million at the time) to them. The attacker has returned almost all of the stolen funds. These funds were exchanged for Ethereum (ETH) during the attacker's holding period, and the price of ETH has since fallen. However, the attacker returned about 22,960.07 ETH, worth about $65.7 million, which accounts for over 96% of the initial stolen funds in terms of US dollar value.