Since May 2021, an alarming $2.7 billion has been lost to approval phishing attacks. A multinational operation recently identified one victim in the middle of a scam.

A coordinated effort has been launched to combat cybercriminals involved in approval phishing. According to Chainalysis, these attacks deceive unsuspecting victims into signing malicious blockchain transactions, often through fake crypto apps. Once completed, scammers can spend certain tokens within the victim’s wallet, potentially draining their life savings.

One particularly notable incident in September 2023 resulted in a loss of $24.23 million in staked ETH from a victim’s wallet. Chainalysis warns that this issue is “a much bigger problem than previously known.”

To address this, Chainalysis has launched “Operation Spincaster,” aiming to identify compromised wallets before any lasting damage occurs. This operation spans six countries and has identified over 7,000 leads, with losses amounting to approximately $162 million. In an extraordinary development, one victim was alerted mid-scam, allowing them to revoke the attacker’s approval before losing hundreds of thousands of dollars in crypto.

Operation Spincaster demonstrates how law enforcement agencies increasingly use blockchain analytics to monitor illicit fund flows. The National Crime Agency (NCA) identified 230 British victims and is committed to bringing offenders to justice, regardless of their location. The NCA’s acting head of illicit finance, Celestino Calabrese, stated:

This work has protected victims here in the U.K. and provided opportunities for us to pursue organized crime groups causing significant harm. Many of these groups are based overseas, utilizing sophisticated methods to gain the trust of unsuspecting investors.

While some police forces are hiring their own crypto investigators, such departments are often experimental and understaffed. Operations like this, coupled with collaboration from crypto exchanges, provide the extra manpower needed to deliver results. Ruben van Well of the Dutch National Police commented:

By the end of the sprint, we were able to set up detection methods and freeze several wallets to prevent further loss of funds for victims. The relationships and collaborative efforts established through Operation Spincaster mark a pivotal step in our efforts to disrupt and prevent scams within the ecosystem.

Binance was involved in Operation Spincaster and plans to expand the initiative to more countries. The exchange’s staff also focused on identifying victims, informing them about the scam, and offering education to help them stay safe in the future.

Chainalysis emphasizes that educating crypto users is crucial in combating scams. Even experienced investors can fall victim to phishing attacks. The company advises:

Cryptocurrency exchanges wield significant influence in detecting and preventing approval phishing scams. Implementing proactive — rather than reactive — transaction monitoring capabilities and a robust risk management strategy is essential to effectively combat and prevent such threats.

For the public, as approval phishing remains a persistent threat, crypto owners should be exceedingly wary if urgently asked to send money or provide personal information, even if the request appears official. Taking a moment to perform independent research through search engines and social media can help verify the request’s authenticity. Trusting your instincts is also vital; if something seems too good to be true, it probably is.

Approval phishing is a clear indication that cybercriminals continually adapt their tactics as awareness of their methods grows. With hacks happening frequently, investing in crypto carries significant risks, which could hinder wider global adoption.

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