Binance, a major crypto exchange, says it's finding 300,000 fake addresses meant to fool traders every week
Kenneth Niemeyer
Personal Finance, Cryptocurrency
Binance, a crypto exchange, developed an algorithm to detect 'address poisoning.'

'Address poisoning' is when scammers create fake accounts to trick victims into sending them money.

Binance is finding 300,000 fake addresses every week, mainly on Ethereum and Bitcoin networks.

As crypto thieves find more creative ways to trick people, so do those trying to crack down on them.

Binance, a major crypto exchange, told Business Insider that it has developed an algorithm to spot fake crypto addresses — used in so-called "address poisoning" scams. The company said it's already found over 15 million accounts it believes are fraudulent since the algorithm went live last year.

"Address poisoning" is a technique in which thieves create fake accounts using strings of numbers and letters similar to the addresses of their targets. Then the thieves use the fake account to make small transactions with the victim, hoping the victim will later slip up and send more money to the similar but fake account by accident.

Earlier this month, one Bitcoin trader lost nearly $70 million after scammers targeted their crypto wallet in such a scheme. The thieves took the stolen Bitcoin and traded it for 23,000 Ethereum before transferring the funds. Ethereum was trading at $3,116 a coin at the time of the fraud.

According to Binance, the company's algorithm is detecting some 300,000 fake addresses every week, mostly on Ethereum and Bitcoin networks.

Scammers have easy access to account information for people trading crypto because blockchains are public, putting little to no barrier between sensitive crypto addresses and thieves.

Binance's algorithm zeroes in on transactions with little to no value, examining the addresses of the sender and recipient for similarities.

"Finally, we ensure that the timestamp of the regular transfer precedes that of the suspicious transfers, which allows us to detect the point of poisoning, along with the spoofed addresses to which the bad actors will expect to receive victims' money," a Binance spokesperson said.

To avoid falling victim to address spoofing scams, Binance recommends double-checking addresses before making a transaction, saving frequently used addresses, making small test transactions, and being careful when copying and pasting address names.

Using a crypto name address shortening service such as Ethereum Name Service can also "substantially reduce the likelihood of being scammed," the exchange says. Services like ENS provide a "shorter, more recognizable address that is difficult for scammers to replicate."

Recovering money lost in cryptocurrency scams is essentially impossible. The FBI warns that services offering to return money to the victims of crypto scams might actually also be scams themselves.

"Representatives of fraudulent businesses claiming to provide cryptocurrency tracing and promising an ability to recover lost funds may contact victims directly on social media or messaging platforms," the agency says.

The scammers usually charge an up-front fee and then ghost their victims after receiving payment, police say.
Binance, a crypto exchange, developed an algorithm to detect 'address poisoning.'
'Address poisoning' is when scammers create fake accounts to trick victims into sending them money.
Binance is finding 300,000 fake addresses every week, mainly on Ethereum and Bitcoin networks.
As crypto thieves find more creative ways to trick people, so do those trying to crack down on them. Binance, a major crypto exchange, told Business Insider that it has developed an algorithm to spot fake crypto addresses — used in so-called "address poisoning" scams. The company said it's already found over 15 million accounts it believes are fraudulent since the algorithm went live last year. "Address poisoning" is a technique in which thieves create fake accounts using strings of numbers and letters similar to the addresses of their targets. Then the thieves use the fake account to make small transactions with the victim, hoping the victim will later slip up and send more money to the similar but fake account by accident. Earlier this month, one Bitcoin trader lost nearly $70 million after scammers targeted their crypto wallet in such a scheme. The thieves took the stolen Bitcoin and traded it for 23,000 Ethereum before transferring the funds. Ethereum was trading at $3,116 a coin at the time of the fraud. According to Binance, the company's algorithm is detecting some 300,000 fake addresses every week, mostly on Ethereum and Bitcoin networks. Scammers have easy access to account information for people trading crypto because blockchains are public, putting little to no barrier between sensitive crypto addresses and thieves. Binance's algorithm zeroes in on transactions with little to no value, examining the addresses of the sender and recipient for similarities. "Finally, we ensure that the timestamp of the regular transfer precedes that of the suspicious transfers, which allows us to detect the point of poisoning, along with the spoofed addresses to which the bad actors will expect to receive victims' money," a Binance spokesperson said. To avoid falling victim to address spoofing scams, Binance recommends double-checking addresses before making a transaction, saving frequently used addresses, making small test transactions, and being careful when copying and pasting address names. Using a crypto name address shortening service such as Ethereum Name Service can also "substantially reduce the likelihood of being scammed," the exchange says. Services like ENS provide a "shorter, more recognizable address that is difficult for scammers to replicate." Recovering money lost in cryptocurrency scams is essentially impossible. The FBI warns that services offering to return money to the victims of crypto scams might actually also be scams themselves. "Representatives of fraudulent businesses claiming to provide cryptocurrency tracing and promising an ability to recover lost funds may contact victims directly on social media or messaging platforms," the agency says. The scammers usually charge an up-front fee and then ghost their victims after receiving payment, police say.