Bitcoin trader laments $70 million loss from incorrect address entry

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​​In a concerning incident, a cryptocurrency trader reportedly lost a staggering amount - nearly $70 million - in an "address poisoning" scam. This type of scam is carried out by cybercriminals who create fake versions of their victim's online cryptocurrency addresses. They then send a small amount of currency to the victim's actual address, hoping the trader will accidentally send funds to the fraudulent address in the future.

The individual's cryptocurrency wallet on Coinbase has experienced a significant depletion, with approximately 97 percent of its assets lost. The account's current value stands slightly above $1.6 million.

The public nature of blockchain technology makes it relatively easy for scammers to locate people's cryptocurrency addresses and initiate these spoof transactions as part of their phishing efforts. According to Transak, a crypto trading platform, this tactic is becoming increasingly common as bad actors seek to exploit the decentralized nature of digital assets.

The FBI's 2023 Internet crime report reveals a concerning trend of increasing cryptocurrency-related scams. According to the report, these fraudulent activities resulted in investors losing a substantial $3.94 billion last year, accounting for over three-quarters of the total investment scam losses for the period.

A specific type of scam known as "pig butchering" has emerged, costing investors $75 million between 2020 and 2024. This deceptive scheme typically begins with criminals initiating contact through a misleading text message to establish trust with their targets.

In this scam, fraudsters send small payments to victims to gain their confidence, enticing them to invest in fake cryptocurrency opportunities. Once the victim has transferred a significant sum of money, the scammers abruptly sever communication, leaving the victim at a loss. The term "pig butchering" alludes to the practice of fattening a pig before slaughter, reflecting the deceitful nature of the scheme.

According to the Federal Trade Commission, a significant portion of cryptocurrency fraud involves scammers coercing victims into paying them in Bitcoin to evade detection of their illicit activities. To combat such scams, the agency advises individuals to exercise caution and be wary of individuals who insist on cryptocurrency payments or promise unrealistic returns on dubious investments.

Remaining vigilant and skeptical of offers that seem too good to be true is crucial in safeguarding oneself against cryptocurrency scams. By staying informed and adopting a cautious approach to financial transactions involving digital assets, individuals can better protect themselves and their families from falling victim to fraudulent schemes.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash