The Rise of Approval Phishing
A scam tactic known as ‘Approval Phishing’ is becoming more prevalent in targeting crypto users. This method was originally used by fraudsters distributing fraudulent crypto apps but has now been adopted by romance scammers. Chainalysis, a blockchain analysis firm, has identified over 1,000 addresses involved in approval phishing scams through similar transaction patterns.
Devastating Impact of Approval Phishing
Chainalysis estimates that victims of approval phishing scams have lost around $1 billion since May 2021. However, this figure may be even higher due to underreporting and the limited dataset used for analysis. The revenue generated by approval phishing scammers peaked at $516.8 million in May 2022, with a small number of actors responsible for the majority of theft.
The Mechanics of Approval Phishing
In approval phishing, scammers deceive users into approving malicious blockchain transactions. This allows them to deplete the victim’s wallet of specific tokens. Chainalysis discovered that scammers typically send the funds to a separate wallet from the one granted approval. The process involves the victim address approving the second address to spend their funds, which are then moved to a new destination address by the approved spender address.
Exploiting Decentralized Apps
Approval phishers also exploit decentralized apps (dApps) on smart contract-enabled blockchains like Ethereum. They take advantage of users’ familiarity with signing approval transactions and rely on the permissions granted and the trustworthiness of the receiving party.
Hot Take: Protect Yourself from Approval Phishing Scams
To protect yourself from approval phishing scams, it’s crucial to be cautious when approving transactions and granting permissions. Verify the legitimacy of apps and wallets before using them. Be wary of unexpected requests for approval and double-check the recipient address before confirming any transactions. Stay informed about the latest scam tactics and report any suspicious activity to authorities. By staying vigilant and taking necessary precautions, you can safeguard your crypto assets from approval phishing scams.
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