On May 26, the unfortunate victim who lost $6.91 million worth of 1,807 liquid staked Ethereum seems to have recovered a significant portion of the stolen funds from the scammers. Blockchain analysis firm SlowMist’s co-founder Yu Xian revealed that the former phishing group Inferno Drainer used an offline authorization signature to seize approximately $7 million worth of Ethereum from a user.
Hack Attack Drew Attention
Recently, Scam Sniffer posted on X that the victim recovered 1,445 Ethereum or 80% of the stolen funds after the scammers allegedly kept a 20% reward. Analysts claimed that the wallet address involved in the breach was subjected to a phishing attack where a malicious actor created a legitimate off-chain authorization signature to transfer ERC-20 tokens from a wallet that didn’t belong to them.
According to SlowMist, the attack was executable due to an overlooked feature in Ethereum permissions introduced via EIP-2612. The EIP allows users to interact with smart contracts without prior authorization by adding an authorization signature. However, the permission function can be executed by any account regardless of ownership.
Recommendations for Hack Attacks Followed
During this process, if users had previously compromised their wallet signatures on phishing websites, scammers could still use the permission attack to take tokens from their wallets even if no transaction was approved. To protect against such attacks, SlowMist recommended:
“It is recommended to periodically use authorization tools like RevokeCash to detect abnormal authorizations. The Uniswap Permit2 authorization management tool can also be used. If any irregular authorization is detected during verification, it is crucial to revoke them immediately.”
However, not everyone sided with the victim in this incident. Renowned DeFi detective ZachXBT shared the following statements on the matter:
“How do you fall for a phishing attack for $638,000 last year and $6.9 million this year? Some people are careless with their assets.”
According to news that surfaced in March, cryptocurrency-related scams increased by 53% over the past year. According to the FBI, cryptocurrency investment scams accounted for 86% of all investment losses in the United States in 2023.
