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Binance CEO warns of new scam targeting crypto users

In this post:

  • Binance CEO Changpeng “CZ” Zhao warns of a new scam using mirrored wallet addresses, targeting crypto users. Experienced operators have already fallen victim, with one losing $20 million before a timely response prevented further loss.
  • The scam can be avoided through blockchain domains like the Ethereum Name Service, strong, unique passwords, and two-factor authentication.

Changpeng “CZ” Zhao, the CEO of Binance, has brought to light a deceptive crypto scam that targeted his users. This latest ploy involves a sophisticated manipulation of wallet addresses, which has already led to significant financial loss for some. Here’s a detailed insight into this alarming trend.

Deceptive addresses and dust transactions

CZ revealed a new scam that has alarmed the crypto community. The fraudsters generate deceptive addresses that mimic the victim’s original address, both starting and ending with the same characters. Once the mirrored address is produced, scammers then send the target dust transactions, minor amounts that will reflect in the victim’s transaction history.

The tactic has already claimed victims. One well-experienced crypto operator fell for this scam on August 1, mistakenly sending cryptocurrencies worth $20 million to a dust address. Also, the error was noticed immediately after the transaction, and Binance managed to freeze the Tether before it reached the scammer. Another user was less fortunate, losing $20,000 USDT to a similar scam, with the funds eventually transferred to a crypto mixer and irrecoverable.

Safety measures and recovery processes: How to guard against crypto fraud

This new scam highlights the importance of vigilance and proper security measures in the crypto community. Blockchain domains, such as the Ethereum Name Service, could avoid this scam, allowing users to identify wallets using regular words rather than confusing strings of characters. Binance users can even purchase domains through the platform for this purpose.

Security specialists further caution against copying and pasting addresses from applications to transfer funds. Strong, unique passwords and two-factor authentication are also recommended.

In case of falling victim to such a scam, CZ advises following a recovery process that includes filing a police report to freeze funds and prevent scammers’ access. Even though immediate recovery might not be possible, this step can still impede scammers from accessing the stolen funds.

An industry-wide concern

Coinbase users have also reported similar incidents, indicating that scams and phishing attacks have become more widespread. There have been claims of scammers contacting clients using the domain name of crypto exchanges to deceive them.

The issue also led to discussions about Binance’s support for Ethereum Name Service (ENS), which would solve the fake crypto address problem, providing better security.

Last month, CZ also raised an alarm on phishing and other social engineering scams targeting crypto enthusiasts. However, his warning was in response to the hack of Uniswap (UNI) founder Hayden Adams’ Twitter account. Adams’ account was taken over by malicious players who posted false tweets claiming that the decentralized exchange was compromised. They also attached a phishing link, instructing users to revoke access to their wallets. However, Uniswap’s official Twitter account quickly debunked the news and informed the community about the hack. The protocol warned that it was not organizing any airdrop, giveaway, or bounty.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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