Binance Develops Algorithm to Combat Address Poisoning Scams

Binance has taken a major step towards combating the growing threat of address poisoning scams by developing an innovative algorithm.

The exchange’s security team has created a unique method to identify and flag millions of poisoned crypto addresses.

Key points:

• Binance’s algorithm identified 13.4 million spoofed addresses on the BNB Smart Chain and 1.68 million spoofed addresses on Ethereum.
• Address poisoning involves scammers sending small amounts of digital assets to wallets resembling potential victims’ addresses, hoping they will accidentally send funds to the spoofed address.
• The algorithm identifies suspicious transfers, pairs them with potential victim addresses, and timestamps malicious transactions.
• HashDit, Binance’s security partner, has registered spoof addresses in its database.
• The necessity for this preventive measure became apparent after an unknown trader lost $68 million to an address-poisoning scam.

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Scammers use address poisoning as a deceptive tactic to manipulate transaction histories and mislead unsuspecting victims. The scammers send a small amount of crypto to a wallet address that closely resembles the potential victim’s address.

The goal is to trick the victim into accidentally copying and sending funds to the scammer’s spoofed address.

Binance algorithm will alert users about the suspicious transfer

Binance’s algorithm works by first identifying suspicious transfers, such as those with near-zero value or unknown tokens. It then pairs these transfers with potential victim addresses and timestamps the malicious transactions to determine the likely point of poisoning. This approach allows Binance to alert users before they inadvertently send money to criminals.

The spoofed addresses identified by Binance’s algorithm are registered in the database of HashDit, a Web3 security firm partnered with the exchange. 

Also read: Two Brothers Indicted For $25 Million Ethereum Blockchain Heist

The algorithm’s development comes in the wake of a recent high-profile address poisoning scam that resulted in an unknown trader losing $68 million worth of Wrapped Bitcoin (wBTC) in a single transaction. Fortunately, the scammer returned the stolen funds on May 13.

Binance’s security experts emphasize the importance of vigilance when dealing with cryptocurrency transactions.