In 2023, the cryptocurrency market experienced a surge in phishing scams, resulting in a staggering loss of $295 million from 320,000 users. These scams have become increasingly sophisticated, targeting crypto wallets and exploiting the rising asset prices and regulatory activities within the industry. In this article, we will delve into the details of these wallet drainers, the tactics they employ, and the impact they have had on the crypto community.
The Growing Threat of Wallet Drainers
Wallet drainers are malicious actors who utilize phishing techniques to deceive users into signing false transactions, ultimately leading to the loss of their assets. Over the past year, these phishing activities have steadily increased, with scammers deploying more sophisticated tactics to evade security measures. According to a report by Scam Sniffers, wallet drainer scams accounted for a total loss of $295 million from 324,000 victims in 2023.
Phishing Websites and False Transactions
Phishing websites have been the primary tool used by wallet drainers to trick unsuspecting users. These websites create a false sense of security, often mimicking legitimate platforms, and trick users into signing large transactions. The success of these scams has raised concerns within the industry, leading to increased regulatory scrutiny.
Airdrops and Hacking Incidents
In addition to phishing websites, wallet drainers have also utilized airdrops and hacking incidents to exploit users. Airdrops, which are typically used to distribute tokens to a community, have been manipulated by bad actors to gain credibility and community traction. Furthermore, hacking incidents involving compromised social media platforms or attacks on project libraries have also been observed.
The March Surge
One notable surge in wallet drainer activities occurred in March, coinciding with fluctuations in the USD Circle (USDC) rates. On March 11, there was an excess of $6 million stolen as people interacted with fake USDC websites. This highlights the vulnerability of users to price fluctuations and the tactics employed by wallet drainers to take advantage of such situations.
Evolving Techniques: Drainers on the Move
While some wallet drainers have exited the market, new actors quickly replace them. For example, when Inferno Drainer announced its exit, Angel drainers emerged to take its place. These drainers deploy both new and existing techniques to gain traction, such as paid Google and social media scams that lure users to fake websites.
Fake Airdrops and Discord Links
Fake airdrops have become a major tool for wallet drainers to deceive users and gain community traction. By posing as legitimate protocols, bad actors create the illusion of user interaction and engagement. Other techniques include exploiting Discord links and manipulating Twitter comment sections, all while remaining relatively unnoticed compared to hacking attacks.
Prompt Community Response to Hacking Attacks
While hacking attacks have a broad impact, the crypto community has shown a prompt response, typically within 10-50 minutes. This quick reaction helps mitigate the damage caused by these attacks. However, airdrops, organic traffic, paid advertising, and taken-over Discord links are much less noticeable, allowing wallet drainers to continue their activities unnoticed for longer periods.
Top Wallet Drainers in 2023
Despite the efforts of security firms and regulatory bodies, wallet drainers managed to exploit millions of users in 2023. Inferno Drainer topped the list, stealing $81 million from 134,000 users. Following closely were MS and Angel Drainers, with $59 million and $20 million stolen from 63,000 and 30,000 users, respectively. Other notable drainers include Monkey, Venom, and Pink Drainer, all of whom targeted a significant number of users.
Decreasing Scam Numbers in 2023
While the loss of $295 million is significant, it is important to note that cryptocurrency scams witnessed a decrease compared to 2022 figures, which amounted to $4 billion. Blockchain security firm Beosin reported reduced scams across all sectors of the industry. However, September and November stood out as the months with the highest number of illicit activities, indicating the need for continued vigilance.
Wallet drainers continue to pose a significant threat to the crypto community, with phishing scams costing users millions of dollars in 2023. The increasing sophistication of these scams demands the attention of both users and industry stakeholders. By staying informed, vigilant, and adopting security best practices, users can protect themselves from falling victim to these malicious actors. Additionally, ongoing efforts by security firms and regulatory bodies are crucial to combating these scams and ensuring the long-term security of the cryptocurrency market.
