Press Release

Singaporean Blockchain Wallet Security Company Discovers New Type of Scam Targeting Centralized Exchanges

Fraudulent Transactions Exploit Wallet Vulnerability, Could Have Stolen More than $3 Million in TRX

CoinsDo, a Singaporean blockchain asset security company, has uncovered a sophisticated scam involving fake transactions and multiple smart contracts targeting major centralized cryptocurrency exchanges. While only a single successful instance of this scam has been confirmed, further analysis of the smart contracts in question revealed that the perpetrators initiated hundreds of these fake transactions, potentially defrauding exchanges, payment gateways, and centralized wallet companies of more than $3 million USD worth of TRX. 

It is highly possible that both firms who built their own wallet infrastructure as well as major wallet solution providers like Fireblocks are not adequately prepared to detect this type of fraudulent transfers. This presents a major operational loophole to be exploited by malicious actors.

The scam began with the perpetrator initiating a fraudulent TRX transfer to their deposit address on a centralized exchange. Through the use of multiple smart contracts, they were able to trick the exchange’s wallet infrastructure into validating the fraudulent transaction. This led the exchange to credit the equivalent amount of cryptocurrency to the perpetrator’s account, which they promptly liquidated for cash. 

The transaction looks just like a regular, successful transfer via smart contract.

The perpetrator had mass-triggered a smart contract (Smart Contract A) to initiate multiple transfers via a proxy smart contract (Smart Contract B) to roughly 100 end-user deposit addresses on various centralized exchanges

Smart Contract A was programmed to interact with Smart Contract B to initiate transfers as internal transactions, a sophisticated technique allowing the perpetrator to make fraudulent transactions appear legitimate. 

Graphical illustration on how the fraudulent transaction was made

What was so insidious about this fraudulent transaction was the fact that it could only be identified by a single parameter in the transaction data – “rejected”: true.

A tell-tale sign of a fraudulent transaction.

Malicious actors are getting more creative in their ways of stealing funds, targeting previously overlooked loopholes and vulnerabilities instead of private keys. Just look at the recent WazirX and Lmnl case, which resulted in losses over $230 million. This raises the question of whether wallet providers are overly focused on encryption technologies and algorithms, potentially at the expense of more practical security measures.

To better protect yourself from scams like the one mentioned, it is recommended that all wallet solution providers take extra care to verify transaction details, both internal and external, especially when smart contracts are involved. 

Source: https://www.coinsdo.com/en/blog/new-scam-alert-tron

About author

Articles

Crypto Chain Wire specifically designed for crypto, NFT, DeFi and all other blockchain companies to provide them instant and effortless crypto news syndication services. CryptoChainWire is the best PR syndication platform for any blockchain startup looking to gain maximum media attention. Contact us at [email protected] or visit at https://www.cryptochainwire.com/
Related posts
Press Release

Bitcoin Reaches New Heights: Businesses Gear Up for the Crypto Boom with NOWPayments

For the first time in history, Bitcoin (BTC) has crossed the $100,000 mark, signaling a…
Read more
Press Release

SlowMist Joins Hong Kong Web3 Festival 2025 as Platinum and Side-Event Sponsor

As a team that has long focused on blockchain security and conducted in-depth research in blockchain…
Read more
Press Release

Trescon’s World Blockchain Summit Rebrands to HODL, Signalling a Bold New Era for Innovations in Blockchain and Beyond

Since its inception in 2017, the World Blockchain Summit (WBS) has grown into the world’s…
Read more
Newsletter
Become a Trendsetter

Sign up for TheTechly’s Daily Digest and get the latest and trending technology updates.

[mc4wp_form id="729"]