In the first quarter of 2023, the DEA was tricked by a common crypto scam. Thus, resulting in losing $50,000 worth of cryptocurrencies. The collection of the amount took three years of investigation of smugglers using cryptocurrency for laundering drugs.
In May, the DEA seized over $500,000 worth of cryptocurrency ‘Dollar Linked Tether’. The two accounts were in Binance and were primary suspects of laundering drug proceeds. The funds were stored in DEA-controlled accounts. The funds were present in the Trezor hardware wallet under security.
DEA as a standard forfeiture processing sent a test amount of $45.36 in Tether to US Marshal Service. However, a scammer was watching the Blockchain during the transaction. Thereafter, the scammer quickly set up a cryptocurrency address that was similar to the first 5 and last 4 characters of the Marshals account.
The scammer quickly dropped the fake address to the DEA’s account. He sent a token that seemed to be a test payment made to the Marshals. The trick was for the DEA to think the fake address was the real Marshal’s address. Since crypto addresses are too long, people always copy-paste it, rather than manually typing it every time.
Airdropping is a legal feature where an individual drops tokens representing the value of a currency in someone’s account. It takes place during a new token launch. However, the feature is often misused by scammers to dupe crypto owners.
The DEA only sent $55000 to the scammer’s account and got lucky. Moreover, when the Marshals noticed the scam they quickly reported it to the DEA. Later, the DEA contacted Tether to freeze the scammer’s account. This way, the scammer would not be able to cash the amount. However, the Tether officials declare that the money is long gone.
DEA officials jointly worked with the FBI and confirmed the fund was converted into Ether and Bitcoin. Moreover, it was transferred to a new wallet. As per the warrant, the scammers were using two accounts in Binance. They were paying gas fees for the scammers using the powerful Ether network. Two different Gmail accounts were used by the scammers. Thereafter, the agents are looking deep into Google to gather more information on the same.
The scammers have been shifting large amounts of Ether in recent months. A scammer’s wallet containing ‘$40000’, received $425000 since June. This was seen through a search on Etherscan Ethereum Blockchain. Over the last three weeks, more than $300,000 were transacted to 7 different accounts.
While DEA made no comments, the FBI refused to respond.
Related Article: Top Crypto Scams in the world and How to Avoid Them
In recent years, there has been an increase in a type of attack called an “airdrop.” This attack involves a scammer sending digital tokens to a victim’s wallet and then sending them to a fake website promising big rewards. The goal of the scammer is to get the victim’s wallet keys.
Global security advisor at ESET says the hack in the DEA case was pretty sly. Moreover, it took advantage of the user’s dependence on checking the first and last characters of the account identifiers. Chainanalysis Address Scanning is a tool to detect such fraud addresses. However, it’s not clear if DEA uses such tools while operating seized crypto assets.
Moore warned that agents may think verifying the last four digits of a wallet address is enough, but it’s crucial to double-check and have others review transactions involving large sums of money. Cybercriminals have an advantage in digital crime and fraud, making it even more important to be vigilant.