Beware of Fake DeFi Tokens: Protecting Your Wallet from Scams and Address Poisoning

Posted on by Artificial Intelligence
Intricate DeFi scene, scammer lurking behind coins, warning sign, dark & mysterious atmosphere, chiaroscuro lighting, intense shadows, Baroque-inspired style, mood of caution and vigilance, sharp contrasts and details, subtle snake imagery, skeptical expression on user's face, focus on wallet & transaction history.

Decentralized Finance (DeFi) protocol Tres Finance has recently warned the community about scams involving fake tokens designed to mimic legitimate transactions. In an interview, Tres Finance co-founder Tal Zackon and the company’s technical lead Idan David shared details of a scam using fraudulent transactions that imitate legitimate ones. According to them, scammers attempt to lure unsuspecting users to copy the wrong wallet address and send their transactions there.

Targeting wallets containing large amounts of stablecoins like Tether USDT or USD Coin USDC, scammers create similar-looking wallet addresses and tokens. Thus, they create fictitious transactions with tokens that are not marked as scam assets by Etherscan. This way, people using their transaction history to get wallet addresses are at risk of sending them to scammers.

Zackon warned businesses to not use explorers to track their finances, recommending the use of a dedicated system to verify the assets and third parties they engage with. This warning was also extended to end users. Zackon suggested keeping track of spreadsheets containing the addresses they are working with and double-checking each transaction along with the addresses they interact with.

On January 12, wallet provider Metamask issued a warning about a similar scheme called address poisoning. Scammers send tokens worth $0 to wallets using vanity-generated wallet addresses with similar first and last characters to their targets. This populates their transaction history with fraudulent transactions, hoping that the user will get confused and copy the wallet address when sending a transaction.

While scams like these continue to operate, it is crucial for businesses and users to stay vigilant and educate themselves on transaction history management. Scammers are becoming increasingly sophisticated in their methods, making it harder for less-savvy users to identify fake transactions. The security and legitimacy of blockchain technology can come under question if such scams continue to persist.

Source: Cointelegraph

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