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The cryptocurrency landscape has long faced threats from malicious actors intent on pilfering user funds. A recent report from Crystal Intelligence highlights that nearly $19 billion worth of digital assets have been stolen over the past 13 years, culminating on June 19, 2024. This staggering figure is complemented by a troubling count of 785 reported hacks and exploits occurring within this timeframe.
The breakdown of the theft indicates that $6 billion was lost due to security breaches, nearly $5 billion was siphoned from decentralized finance (DeFi) hacks, and about $8 billion was lost to various types of fraud. The crypto community continues to grapple with these risks as it evolves.
The Rise of Targeted Attacks on Emerging Blockchains
As the threat landscape evolves, criminals have started to shift their focus towards newer blockchain networks that are less established. On August 31, Blockaid, a prominent blockchain security firm, reported the emergence of an upgraded version of the infamous crypto phishing toolkit known as Angel Drainer. This new variant, dubbed “AngelX,” poses a significant risk to unsuspecting users on these networks.
Angel Drainer gained notoriety for its role in various malicious activities, including the significant Ledger Connect Kit Attack, during which it exploited vulnerabilities in crypto wallet software. In its previous incarnation, Angel Drainer successfully expropriated over $400,000 from 128 crypto wallets by deploying a malicious vault contract. It appears that despite claims of shutting down, this threat has resurfaced more potent than before.
The Features and Dangers of AngelX
Oz Tamir, a researcher at Blockaid, underscores the alarming capabilities of AngelX, asserting that it is currently one of the most harmful wallet drainers due to its sophisticated features. It supports a range of new blockchains, such as TON and TRON, and boasts enhancements to its user interface, making it easier for criminals to orchestrate scams. In addition, it incorporates new attack methodologies, including seed phrase theft and advanced cloaking features to evade detection by security systems.
Tamir notes that the targeting of newer blockchains reflects a strategic pivot by malicious actors seeking opportunities where security measures may be lax. Many of these emerging networks do not have the robust protective mechanisms in place that more established platforms do, making their users prime targets for theft.
Understanding the Mechanism of Crypto Drainers
Brian Carter, a Senior Intelligence Analyst at Chainalysis, elaborates on how these attacks work. Scammers often exploit weaker security on newer blockchain networks, attracting fewer observers to online transactions. Crypto drainers typically lure victims by pretending to be legitimate Web3 projects, encouraging users to connect their wallets directly to these malicious tools.
Once a victim connects their wallet, the drainers can gain control and approve transactions that deplete their funds almost instantaneously. Chainalysis has noted that the stolen amounts attributed to drainers outpace those lost to ransomware attacks, representing a significant and growing threat to crypto holders.
Surge in Malicious DApps
Recent data indicates a troubling increase in the number of malicious decentralized applications (DApps) being deployed. According to Tamir, AngelX has already launched around 300 DApps aimed at stealing digital assets. The weekly average of these malicious DApps has surged from approximately 180,000 to nearly 350,000 within just a few months of 2024. This trend correlates with the resurgence of a crypto bull market, attracting more users and funds into the ecosystem, which, in turn, motivates attackers to develop sophisticated new scams.
Steps for Protection Against Attacks
Despite the ever-present threat of phishing attacks and DApp scams, experts believe users can take proactive measures to safeguard their assets. Carter recommends utilizing Web3 security extensions that can recognize phishing websites and evaluate the security of crypto wallets. He emphasizes the importance of remaining vigilant in monitoring wallet activity, especially as the market attracts more participants.
Tamir highlights that Blockaid maintains a dedicated threat intelligence team focused on identifying and tracking various drainer developers. This initiative helps generate heuristics to detect malicious patterns, thus enabling the preemptive identification of threats before they can be executed.
Nonetheless, not every crypto drainer is identified in time. Carter advises users to consider storing significant funds in offline wallets and to only transfer assets to hot wallets when absolutely necessary. Utilizing temporary wallets with no substantial assets for connecting to unfamiliar Web3 sites can also reduce exposure to potential threats. Users should exercise caution regarding links shared in chat rooms or on social media, which may not originate from official sources.
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