According to CoinTelegraph, Binance CEO Changpeng Zhao (CZ) warned followers on platform X, formerly Twitter, about a widespread and increasingly sophisticated form of scam targeting the crypto community.
This scam uses fake wallet addresses to fool Binance users. The bad guys generate addresses with the same start and end characters as the user’s original address. After generating fake addresses, they will send dust transactions, ie transactions of very small value, to the victim. If a user copies and pastes an address from a dust transaction, the funds will be sent to the scammer.
CZ revealed that an experienced crypto investor fell victim to this scam on August 1. After sending $20 million worth of Tether (USDT) to the fake address, he immediately realized he had been scammed and asked Binance to freeze the other USDT.
Users can avoid scams by using blockchain domains, such as the Ethereum Name Service (ENS) wallet address naming service. Blockchain domains are similar to email addresses, allowing users to identify wallets with regular words instead of a long string of letters and numbers.
In addition, security experts advise users not to copy and paste addresses from the application to transfer money. To protect themselves, users should create strong enough passwords for crypto accounts and enable two-factor authentication on apps.
The timely response from Binance helps users avoid a security incident, but there are other less fortunate victims. Another user claimed to have lost 20,000 USDT to the same scam. Although he contacted the Binance support team within 20 minutes of the transaction, he was still unable to freeze the funds. Almost 12 hours later, the victim’s funds were transferred to a crypto mixer and could not be recovered.
users at Coinbase also reported similar security incidents. The victims allege that the scam is related to the company’s services and applications because they contact customers using the domain name of the cryptocurrency exchange.