Chainalysis
Approval phishing scams ‘a much bigger problem’ than first thought
Published
2 months agoon
By
adminSince May 2021, a staggering $2.7 billion has been lost to approval phishing attacks — and a multinational operation led to one victim being identified in the middle of a scam.
A widespread operation has been launched to thwart cybercriminals engaged in “approval phishing.”
According to Chainalysis, such attacks involve deceiving an unsuspecting victim into signing a malicious blockchain transaction — often through a fake crypto app.
Once complete, it means scammers can spend certain tokens within their wallet at will — potentially draining someone’s life savings in certain circumstances.
A particularly notorious incident back in September 2023 led to one person losing $24.23 million of staked ETH that was sitting in their wallet.
Since May 2021, a staggering $2.7 billion has been lost to approval phishing attacks, with the blockchain analytics firm warning it’s “a much bigger problem than previously known.”
As a result, Chainalysis says that it’s now launched “Operation Spincaster,” which aims to identify compromised wallets before any lasting damage can be done.
Sprints across six countries led to more than 7,000 leads being identified — with losses among these cases amounting to approximately $162 million.
And in a particularly breathtaking development, one victim was contacted and alerted that they were in the middle of an ongoing scam, meaning the approval that was given to their attacker could be revoked before crypto worth hundreds of thousands of dollars was stolen.
Operation Spincaster shows how law enforcement agencies are increasingly making use of the intelligence delivered through blockchain analytics, which leverages the transparency of this technology to monitor how illicit funds flow through the ecosystem.
The National Crime Agency says 230 British victims were identified as a result and has vowed to bring offenders to justice no matter where they are. The NCA’s acting head of illicit finance, Celestino Calabrese, said:
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, and utilize sophisticated methods to gain the trust of unsuspecting investors.
While some police forces are beginning to hire their own crypto investigators, such departments are often experimental and sometimes understaffed. Operations like this — when coupled with collaboration from the crypto exchanges that are being used to move stolen funds — help to give law enforcement agencies the extra manpower they need to deliver results. As Ruben van Well of the Dutch National Police said:
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 marks a pivotal step in our efforts to disrupt and prevent scams within the ecosystem.
Binance was involved in Operation Spincaster, and says that the initiative is now going to be expanded to a greater number of countries. As well as tracing the flow of funds, the exchange’s staff were also tasked with identifying victims, breaking news of the scam to them, and offering education to help them stay safe in the future.
According to Chainalysis, educating crypto users is a crucial first step in clamping down on scams — and unfortunately, even experienced investors can often fall susceptible to a phishing attack. The company went on to add:
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.
And in terms of top tips for the public as approval phishing remains a persistent threat, the company says crypto owners should be exceedingly wary if they are urgently asked to send money or provide personal information — even if the source of the request looks official.
Oftentimes, taking a beat and performing some independent research through search engines and social media can help verify whether such a request is genuine. It’s also about trusting your instincts — as the old saying goes, if something seems too good to be true, it probably is.
Approval phishing is the latest sign that cybercriminals are continually changing their tactics as awareness grows of their methods — and becoming even more emboldened during the bull market. With hacks happening at an alarming frequency, investing in crypto is full of risk… and that might be a substantial stumbling block in the quest for wider global adoption.
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Chainalysis
Illicit crypto activity drops 20%, but stolen funds surge, Chainalysis says
Published
1 month agoon
August 16, 2024By
adminAnalysts at Chainalysis say illicit blockchain activity has dropped nearly 20% YTD, yet stolen funds and ransomware inflows continue to rise.
Illicit crypto activity has declined nearly 20% year-to-date, a positive sign for the growing legitimacy of the sector, according to a mid-year report from blockchain analytics firm Chainalysis.
Despite the decline, there are still concerning trends in specific types of cybercrime, the firm noted, saying that funds stolen in crypto heists nearly doubled to $1.58 billion and ransomware inflows rose by 2% to $459.8 million in the first half of 2024.
Chainalysis attributes the surge in stolen funds to a resurgence in attacks on centralized exchanges, pausing a trend where hackers had focused on decentralized finance. The New York-headquartered firm noted that while the overall number of hacking incidents has only “marginally outpaced” that of 2023, the average value stolen per event has soared by nearly 80% in 2024, driven partly by rising crypto prices.
“The average amount of value compromised per event has increased by 79.46%, rising from $5.9M per event from January to July of 2023 to $10.6M per event thus far in 2024, based on the value of the assets at the time of theft.”
Chainalysis
Ransomware also continues to be a persistent threat, with 2024 on track to surpass last year’s record $1 billion in ransom payments. Chainalysis says 2024 has seen the largest ransomware payment ever recorded at approximately $75 million to the Dark Angels ransomware group.
The ransomware landscape has fragmented somewhat following law enforcement actions against major players like ALPHV/BlackCat and LockBit. However, some affiliates have migrated to less effective strains or launched new ones, increasingly targeting “larger businesses,” according to the report.
Chainalysis cautions that while the overall decline in illicit activity is encouraging, the continued rise in stolen funds and ransomware payments underscores the evolving tactics of cybercriminals.
Elephant in the room
Centralized crypto exchanges are not only frequent targets for hackers but also play a significant role in laundering stolen assets. Chainalysis previously found that trading platforms have received nearly $100 billion worth of crypto from known illicit addresses since 2019, pointing to a troubling lack of international cooperation on anti-money laundering efforts.
According to the firm, nearly 30% of all crypto from illicit addresses eventually ends up at sanctioned services, including the Russian exchange Garantex. The peak was in 2022, when $30 billion of “dirty crypto” interacted with such services, underscoring the persistent challenges in combating crypto-based money laundering.
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