Binance Develops Algorithm to Combat Address Poisoning Scams

Binance has introduced a new algorithm aimed at identifying and mitigating address poisoning scams in the cryptocurrency sector. This measure comes in response to a recent $68 million exploit involving Wrapped Bitcoin (wBTC).

The algorithm has successfully detected over 13.4 million spoofed addresses on Binance’s BNB Smart Chain and 1.68 million on Ethereum. Address poisoning occurs when scammers send minimal amounts of digital assets to a victim’s wallet to make fraudulent addresses appear in the wallet’s transaction history. This method often results in victims mistakenly transferring significant amounts to these spoofed addresses.

Binance’s approach involves identifying suspicious transactions with near-zero value and pairing them with potential victim addresses. The detected spoofed addresses are then registered in the database of Web3 security firm HashDit. This database is utilized by various cryptocurrency service providers, including Trust Wallet, to alert users about potential scams.

The need for such preventive measures was highlighted after an unknown trader lost $68 million due to an address poisoning scam on May 3. Following public scrutiny and investigation, the thief eventually returned the funds.

Address poisoning scams exploit the fact that many traders only verify the first and last few digits of wallet addresses. Scammers use vanity address generators to create similar-looking addresses, making it easier to deceive users.

By integrating this algorithm, Binance aims to enhance the security of its platform and protect users from falling victim to these sophisticated scams. This development marks a significant step forward in the ongoing efforts to safeguard the cryptocurrency community from fraudulent activities.