Binance CEO Warns Against a New Type of Crypto Fraud

  • Binance CEO claims a veteran crypto operator has already fallen prey to this new scam.
  • Crypto-related frauds have surged in recent years. 
  • Some Binance users complained about falling prey to some crypto scams in recent months.

Changpeng “CZ” Zhao, the CEO of Binance, took to his Twitter (Now X) page to alert his followers to a cunning and pervasive scam that targets the cryptocurrency industry and uses phony wallet addresses to deceive users into making fraudulent transactions.

CZ wrote that

The scammers are so good now they generate addresses with the same starting and ending letters, which is what most people check for when doing a crypto transfer. In fact, many wallets hide the middle part of the address with “…” to make the UI look better.

The new fraud involves creating addresses similar to the user’s original. CZ noted that the fraudster sends the target user dust transaction history once the mirrored transaction has been created. The funds will be sent to the con artist if the victim copies and pastes an address from one of the previous transactions.

CZ claims that a skilled crypto operator was recently duped into sending cryptocurrencies worth $20 million to a dust address. Shortly after the transaction, the operator detected the mistake and asked Binance to freeze the Tether USDT to prevent it from reaching the con artist.

While this pattern is relatively new, there are several ways to stay safe. Blockchain domain names such as Ethereum Name Service (ENS) are a good tool to avoid these scams. Blockchain domains work like email addresses. They help users identify wallets with commonly used words rather than a lengthy string of letters and numbers. 

Other protective measures include setting up 2-factor authentication on applications, using strong passwords, and staying cautious.

It is important to note that crypto scams have surged in numbers over the past few years. Data from the Federal Trade Commission (FTC) shows that more than 46,000 people reported losing more than $1 billion in crypto to different scams between January 2021 and June 2022.

Scammers employ different tactics to sway their targets. Some of the most common schemes involve job postings, fake investment opportunities, and impersonation scams.

Lawrence Woriji
Lawrence Woriji Verified Author

I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.

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