Approval phishing scams have become a prevalent threat in the world of cryptocurrency, with reports indicating that at least $1bn has been stolen through this technique since May 2021. According to research conducted by Chainalysis, crypto users have lost approximately $374m to approval phishing scams in 2023 alone.
Approval phishing is a deceptive tactic employed by scammers, often in the realm of romance scams, to trick individuals into signing malicious blockchain transactions. By gaining approval to spend specific tokens from the victim’s wallet, scammers can easily drain their funds without their knowledge. Victims have reported losing substantial amounts, with some cases involving millions of dollars.
Once the victim unknowingly signs the transaction, scammers swiftly transfer the stolen funds to a separate wallet, leaving the victim at a loss. Unlike traditional crypto scams that involve fake investment opportunities or impersonation, approval phishing operates on a more covert level.
Chainalysis’ report reveals that approval phishers are targeting specific crypto users by establishing relationships with them, using tactics commonly seen in romance scams to manipulate victims into signing approval transactions. The analysis also highlights that a small number of sophisticated actors are responsible for the majority of approval phishing thefts. The most successful address is believed to have stolen $44.3m from numerous victim addresses, comprising a significant portion of the total cryptocurrency stolen during the study period.
The report emphasizes that the actual losses from approval phishing scams could be higher than reported, as romance scams are often underreported. To combat this growing threat, crypto compliance teams are advised to educate users about the dangers of approval phishing and to exercise caution when signing approval transactions. Monitoring the blockchain for suspicious consolidation wallets and taking proactive measures, such as freezing funds or reporting suspicious activity to law enforcement, can help mitigate the risks associated with approval phishing.
In conclusion, staying informed and vigilant is crucial in safeguarding against approval phishing scams in the cryptocurrency space. By following best practices and remaining cautious when engaging in transactions, users can protect themselves from falling victim to these deceptive tactics.