Crypto Security Truths: Issue 12
Top Cybersecurity Incidents, Topics, Tools and Issues in Web3, Crypto, and Blockchain Space This Week
13 Sep 24–20 Sep 24
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Introduction
This week’s deep dive into the crypto world uncovers a web of hidden corruption, regulatory manipulation, and the troubling influence of early players in Ethereum’s rise. From the shocking concentration of ETH ownership during the ICO to the murky connections between MyEtherWallet and infamous hacks, the investigation pulls back the curtain on the darker side of the industry. Meanwhile, scrutiny of regulatory actions and exchanges reveals a system that protects the biggest players while punishing smaller ones. These revelations demand a closer look at how far-reaching the influence of a few key actors truly is, and whether the space’s biggest players are shaping the future of crypto for better or worse.
Hacked
BingX Hacked for $44.7M Initially — Now $52M
On September 20, 2024, Singapore-based cryptocurrency exchange BingX suffered a major hack, initially estimated at $26 million but later updated to over $52 million as investigations revealed additional losses across multiple blockchain networks. The attack began with an initial withdrawal of $26 million, followed by a second tranche of $16.5 million, bringing the total loss to $43 million, primarily in Ether ($13.25 million), BNB ($2.3 million), and USDT ($4.4 million), along with 360 other altcoins. Hackers exploited BingX’s hot wallet and laundered the stolen assets via decentralized exchanges like Uniswap and Kyberswap. While BingX downplayed the incident, claiming “minor” losses and promising to fully compensate affected users, forensic analyses have shown higher estimates of up to $52 million. Security experts noted this breach follows a surge of attacks on Asian exchanges, with earlier hacks hitting Indodax, WazirX, and DMM Bitcoin. BingX has limited withdrawals but promised to restore full services within 24 hours. [ Coin Desk, Bitcoinsensus, Coin Telegraph ]
Analyst Note: Yet again, we’re seeing centralized exchanges fall victim to the same Achilles’ heel: hot wallet vulnerability. BingX’s $52 million breach highlights a persistent issue in the crypto space — exchanges continue to gamble with security practices that don’t match the sophistication of the attacks. This isn’t just a random occurrence. We’ve witnessed an alarming rise in similar heists, often followed by ineffective PR damage control. The trend is clear: attackers are evolving faster than defenses, exploiting the weakest points in multi-chain setups. What’s worse is that the very exchanges enabling these attacks have been slow to assist victims of scams routed through their platforms. It’s time for the industry to acknowledge that ‘not your keys, not your crypto’ needs to be more than a slogan — it’s a survival strategy.
Ethena DeFi Front End Compromised
On September 18, 2024, the Ethena Labs frontend was compromised due to a domain registrar breach, prompting warnings to avoid interacting with the platform’s UI or any links associated with it. Despite the frontend compromise, Ethena Labs reassured users that the protocol itself remained unaffected and funds were secure. This incident highlights the importance of securing external assets like domain registrars to prevent similar breaches. [ pcaversaccio on Twitter ]
Large Accounts on X Were Compromised
Several large accounts on X were compromised and used to promote a meme coin scam on September 18, 2024. Although the attackers only made $8K from the scam, the incident raised concerns about how prominent accounts were hacked simultaneously. Observers speculated that the accounts likely gave permissions to the same malicious site or app. This case serves as a reminder to always be cautious when granting permissions, as scammers continually devise new tactics to exploit vulnerabilities. [ ZachXBT on Twitter ]
Analyst Note:
Phishing
Lost $610K to Phishing Links
A victim lost $610,000 worth of rETH and stkGHO after unknowingly signing multiple phishing transactions that approved the transfer of funds. This type of attack emphasizes the dangers of signing unknown approval requests and the importance of verifying the legitimacy of transactions before authorizing them. [ Real Scam Sniffer on Twitter ]
Wrong Address Used — Lost $649K
In another case, a user lost $649,000 by copying the wrong address from a contaminated transfer history. This mistake highlights the growing risk of address poisoning, where attackers insert fake addresses into transaction histories, leading victims to inadvertently send funds to the wrong destination. [ Real Scam Sniffer on Twitter ]
Tried depositing $19K to Crypto.com — Lost it due to Wrong Address
A separate incident saw a victim lose $19,917 while depositing to Crypto.com Exchange after copying the wrong address from a contaminated transaction history. This reinforces the need to avoid copying addresses from transaction histories, which can be manipulated by attackers through address poisoning techniques. [ Real Scam Sniffer on Twitter ]
Uniswap Permit2 Phishing Signature — Lost $127K
A user lost $127,141 worth of Neiro tokens after signing a phishing signature related to a “Uniswap permit2” transaction. This incident showcases how malicious actors exploit new functionalities and underscores the need for users to be vigilant when interacting with decentralized platforms. [ Real Scam Sniffer on Twitter ]
Address Poisoning Example
A user discovered two attempted address poisoning attacks using vanity addresses that mimicked their own wallet’s address, only differing by the last four digits. The user reminded others never to copy addresses from transaction history or explorers and to always use the direct source, such as an exchange or wallet, to avoid falling victim to these sophisticated schemes. [ DeFiFUDDestroy on Twitter ]
Analyst Note: Phishing continues to be one of the easiest yet most effective attack vectors in the crypto space. Whether through address poisoning or malicious signatures, the lesson is clear: users must remain vigilant about transaction approvals and wallet interactions. The common theme across these cases is human error, often exacerbated by the increasing sophistication of phishing tactics. Education on proper wallet management is more critical than ever.
Scammers
Trump Family Token Concerns
Details have surfaced regarding the Trump family’s new token project, with 63% of the supply set to be sold in a public sale, 20% allocated to the team, and 17% for user rewards. However, the token will not be transferable initially, raising suspicions of a potential scam. Critics argue that the team might use this setup to offload tokens after a proposal is passed to make them transferable, causing investors to suffer while the team profits. [ CirrusNFT on Twitter ]
OmegaPro Ponzi Scheme Investigation
OmegaPro, a collapsed Ponzi scheme, reportedly defrauded investors of $4 billion. An investigation is underway to determine where the funds went. The investigator has opened public Discord and Telegram channels, inviting victims or those with information to join the effort in uncovering the scheme’s inner workings and financial traces. [ Coffeebreak on Twitter ]
NEIRO Token Chaos
The co-founder of Binance addressed the issues surrounding the NEIRO token, citing token concentration as the reason for its failure. NEIRO’s price surged over 1,100% due to confusion caused by Binance listing two tokens with the same name. Investors struggled to distinguish between the projects, leading to significant volatility. NEIRO, a Dogecoin-inspired meme token, saw rapid fluctuations but remains subject to the instability caused by token concentration and insider control. [ Bubblemaps on Twitter ]
Trump Family Crypto Scam Spoof
A scam website spoofing the Trump family’s crypto project, “World Liberty Financial,” has made its way to the front page of Google search results. Despite this, people are still purchasing the fraudulent tokens. The project’s legitimacy is being overshadowed by these scams, raising concerns about brand protection and the need for immediate intervention with Google to prevent further investor losses. [ Molly0xFFF and Beausecurity on Twitter ]
Scottie Pippen — KOL for BTC & ETH?
NBA legend Scottie Pippen reflects on the futility of materialistic wealth, noting that expensive items like watches, wallets, and homes offer no more satisfaction than their cheaper counterparts. He emphasizes that true happiness is found in love and connection with others, not in possessions. Pippen’s message serves as a reminder to stay humble, as all people ultimately face the same fate. [ Truth Labs on Twitter ]
Scam Telegram Groups — Getting Awards?
A sarcastic post comments on the irony of scam Telegram groups now receiving crypto awards, suggesting that such recognition goes against the ethos of Bitcoin’s creator, Satoshi Nakamoto. The comment highlights the frustration in the crypto community over the seeming celebration of fraudulent actors. [ NFTherder on Twitter ]
Analyst Note: Scams in crypto continue to evolve, with the Trump family token and OmegaPro highlighting just how easily investors can be manipulated. Whether it’s Ponzi schemes or projects using tokenomics to trap investors, there’s a clear gap in regulation and oversight. The growing frequency of these scams emphasizes the need for due diligence and skepticism, especially around projects that promise high returns without clear accountability.
Gaming
Discord Game 7 Hacked
The GAME 7 Discord was hacked on September 21, 2024, leading to the spamming of malicious links within the server. Moderators quickly confirmed the breach, advising users not to interact with any links. The hack serves as a stark warning to community members about the growing trend of Discord compromises, which have become a frequent target for phishing attacks and scams. [ Aizcalibur on Twitter ]
Analyst Note: Discord hacks, like the Game 7 breach, are becoming an unfortunate norm in gaming and crypto communities. The ease with which malicious actors can exploit these platforms signals a larger issue of trust and security in user engagement spaces. Until these platforms prioritize stronger security measures, users will remain vulnerable to phishing and scam attempts, often leading to devastating financial losses.
Crime
Ransomware Group Earned $75M in BTC
In a revealing post, a blockchain investigator shared details about a major ransomware payment involving the publicly traded company Cencora (formerly AmerisourceBergen). The company reportedly paid the Dark Angels ransomware group $75 million in Bitcoin in March 2024 following a cyberattack. The payment, made in three installments, was the largest known ransom ever paid. The transactions were traced on-chain, with all three payments linked to the same source and accounts with high illicit fund exposure. The ransom initially demanded was $150 million, but Cencora settled for half the amount. [ ZachXBT on Twitter, Bloomberg ]
Analyst Note: The $75M ransom paid by Cencora to the Dark Angels group is yet another sobering reminder of how vulnerable even large corporations are to ransomware attacks. The sheer scale of the payment, tracked via on-chain methods, showcases how public blockchains can be both a tool for transparency and for facilitating illicit activity. Companies must step up their cybersecurity protocols or continue facing massive financial consequences.
On-Chain
Ethereum ICO — Connected Wallet Analysis
A deep investigation has uncovered that 1,910 Bitcoin wallets were responsible for purchasing 62.8% of all Ethereum during its ICO, a massive concentration of ETH ownership among a small group of buyers. By cross-referencing public records, social media, and on-chain data, the investigator mapped these Bitcoin and Ethereum wallets to uncover a network of individuals involved in crypto projects, exploits, and early mining activities. This network links the original funders of major crypto exchanges and contracts, hinting at corruption within the crypto space. The findings suggest that Ethereum’s rise was influenced by illicit funds from Mt. Gox, Silk Road, and other infamous sources. The investigator calls for accountability, alleging widespread corruption within the industry and among agencies that were meant to regulate it. [ Truth Labs on Twitter ]
Tigran Gambaryan’s Exhibits Against Corrupt Agents Bridges and Force — Red Flags Found!
When mapping out the exhibits from the criminal complaint against corrupt agents Carl Mark Force IV and Shaun Bridges, led by IRS investigator Tigran Gambaryan, some red flags immediately emerged. Gambaryan’s investigation only seized a small portion of the agents’ illicit network, and while the inaccuracies in payment dates between Silk Road’s Ross Ulbricht and undercover agents “Frenchmaid” and “Nob” seem minor, what’s most concerning is the incomplete tracing of Bitcoin transactions. A deeper analysis reveals that not all Bitcoin tied to these corrupt agents came from Mt. Gox; instead, some originated from wallets within the agents’ own network, which used shared change wallets. Additionally, tracing the Bitcoin post-payment shows the merging of networks, with payments of 550 BTC and 720 BTC being just a fraction of the Bitcoin amassed by Force. These omissions in the report raise critical questions, especially regarding who controlled these wallets while Agent Force was in prison and why transactions with known power users from Bitcointalk.org, like “Rawted” and “Portnoy,” were left out of the official narrative. [ Truth Labs on Twitter ]
MyEtherWallet BTC Purchase Wallet Analysis
The founder of MyEtherWallet (MEW) is implicated in connections to both the Silk Road and the infamous DAO hack, which was the first major exploit on Ethereum. The investigator claims that the DAO contract, known for its vulnerabilities, was set up by a MyEtherWallet developer, who also controlled Ethereum-related wallets linked to the Blockchain Bandit, a figure associated with large crypto thefts. The ties between MEW and illicit actors from the Silk Road raise concerns about the true intentions of some major figures in the crypto industry, with accusations that they have shifted from being perpetrators to becoming key players in blockchain forensics. The investigator warns against blindly trusting these figures. [ Truth Labs on Twitter ]
Market Makers — Larger Agenda?
Major cryptocurrency exchanges like Binance, Coinbase, Kraken, and Bitfinex are allegedly shielded by regulators, allowing them to operate without significant repercussions. The investigator asserts that these exchanges are part of a larger agenda, with regulatory actions being mostly superficial. Huobi, on the other hand, is suggested to be the one exchange that will face a regulatory takedown when authorities are forced to act. This insight paints a picture of a controlled regulatory environment where the largest players are protected while smaller or less favored exchanges face harsher penalties. [ Truth Labs on Twitter ]
Ethereum DAO Hack — Insider Knowledge Shared?
A Twitter user, @0xgoku, shared a series of flashbacks from Ethereum’s early days in Zug, depicting tension between Charles Hoskinson and the rest of the Ethereum team. The story focuses on Charles’ vision of turning Ethereum into a for-profit company, which clashed with Vitalik Buterin’s nonprofit ambitions. The disagreements culminated in a critical moment, dubbed the “Red Wedding,” where Vitalik declared Ethereum would be a nonprofit. Charles was excluded from leadership, marking a pivotal moment in Ethereum’s history. Charles later founded IOHK and went on to work on Cardano, remaining committed to academic rigor and formal methods. [ 0xgoku on Twitter ]
Analyst Note: The Ethereum ICO investigation has revealed that 1,910 Bitcoin wallets were responsible for purchasing 62.8% of all Ethereum during its initial coin offering (ICO), indicating a massive concentration of ETH ownership among a small, influential group. By analyzing on-chain data and cross-referencing it with public records and social media, the investigator mapped these wallets to individuals involved in early crypto projects, mining activities, and even infamous crypto exploits like Mt. Gox and Silk Road. This suggests that Ethereum’s rise may have been partly driven by illicit funds. The investigation raises serious concerns about potential corruption, implicating the original backers of major crypto exchanges and even some regulatory agencies tasked with oversight. Additionally, exhibits from Tigran Gambaryan’s investigation into corrupt agents involved in Silk Road show incomplete tracing of Bitcoin transactions and missing links to prominent figures on Bitcointalk.org, deepening the concern of hidden collusion in the industry. Moreover, MyEtherWallet (MEW) is under scrutiny for ties to the DAO hack, with allegations that a MEW developer set up the vulnerable contract that led to Ethereum’s first major exploit. The investigator suggests that major exchanges like Binance, Coinbase, and Kraken are shielded by regulators, operating with impunity, while smaller platforms like Huobi could face harsher repercussions. These findings hint at a larger agenda of controlled regulation, protecting some players while selectively targeting others. Finally, tensions within Ethereum’s founding team have resurfaced, as Charles Hoskinson’s vision of a for-profit Ethereum conflicted with Vitalik Buterin’s nonprofit approach, leading to Hoskinson’s exclusion and eventual founding of IOHK and Cardano. The insights shared in this investigation paint a complex, troubling picture of Ethereum’s early days and the current state of regulatory affairs in the crypto world.
News
Scammers Targeted by DOJ within 30-days of $230M Scam
An indictment was unsealed revealing charges against Malone Lam (also known as “Anne Hathaway” and “$$$”) and Jeandiel Serrano (“VersaceGod” and “@SkidStar”) for their involvement in a $230 million cryptocurrency scam. The defendants allegedly laundered stolen Bitcoin through various channels, including peel chains and pass-through wallets, and spent the illicit funds on luxury goods, travel, and extravagant lifestyles. Investigators used social media activity and OSINT techniques to locate the suspects, leading to their arrests. $9 million has been frozen, and the case continues to unfold. [ DOJ Indictment, ZachXBT on Twitter ]
Influencer of the Year at Token2049 — Account Disappears?
A Twitter user raised suspicions over the actions of an individual who deleted all of their social media accounts less than 24 hours after winning an “Influencer of the Year” award. The user found it unusual, especially considering that the account remains online but is not followed by anyone they know, despite having 131K followers, further adding to their suspicion. [ zackvoell on Twitter ]
Degen Summit
Many in the crypto community express skepticism over the selection of so-called “key opinion leaders” or influencers with cartoon avatars. The backlash points to the superficial nature of influencer culture in crypto, with users questioning the legitimacy of these figures. The discussion reveals a divide between real builders in the space and influencers who may have more visibility but less credibility. Notable Response: Users like @j3nn1b33 emphasize that the spotlight should be on real builders who are driving innovation rather than influencers with inflated followings. This aligns with broader concerns that crypto’s reputation is being damaged by focusing on personas rather than the tech and progress being made. [ NFTherder on Twitter ]
Crypto Corrupt Influencer Sleuth Cartel Members
This thread uncovers a deeper narrative about influencers in crypto, particularly a group being labeled as “sleuth cartel members.” These figures, allegedly with connections to major analytical companies, are accused of silencing dissent and controlling narratives to protect their financial interests. Key Point: The discussion criticizes these influencers for their lack of transparency, accusing them of collusion with criminals and manipulation of the truth. @BoringSleuth implies that these players fear voices that challenge their influence, noting how they use their platform to stifle opposition. [ Truth Labs on Twitter ]
Analyst Note: The unsealing of an indictment against Malone Lam and Jeandiel Serrano for their involvement in a $230 million cryptocurrency scam highlights the growing sophistication of law enforcement in tackling crypto crimes. Using techniques like peel chains and pass-through wallets, the defendants laundered stolen Bitcoin, funding extravagant lifestyles. Investigators leveraged social media and OSINT to track down the suspects, leading to arrests and the freezing of $9 million. Meanwhile, skepticism surrounds crypto influencers, as evidenced by the sudden disappearance of the “Influencer of the Year” award winner after Token2049 and growing backlash against influencers with cartoon avatars at events like Degen Summit. The divide between true builders and those focused on visibility deepens, with accusations of a “sleuth cartel” controlling narratives and silencing dissent to protect financial interests. This case and the ongoing debate over influencer culture underscore the need for transparency and credibility within the crypto space.
Policy Issues
DeFi Sites are Blocking VPNs and Requiring You to Sign A Message
The growing trend of DeFi platforms requiring users to disable VPNs and sign messages is raising alarm within the community. This practice, intended to simplify user interactions, is seen as compromising security by opening the door to phishing attacks and privacy vulnerabilities. Key Concern: Crypto wallets, like Rabby, attempt to decode messages before signing, but there’s a strong call to educate users about the risks of normalizing this behavior. It’s a reminder of how user experience improvements sometimes come at the cost of security. [ Debank Stream ]
SEC’s Contradictory Stance
The ongoing battle between the SEC and the crypto industry continues as more inconsistencies arise. The SEC’s shift in its description of what constitutes a “crypto asset security” has drawn attention, with many pointing out contradictions in its legal cases. Community Reaction: Prominent figures like @paulgrewal.eth are quick to criticize the SEC’s confusing stance, especially the statement in their amended complaint against Binance. This situation highlights the regulatory uncertainty and inconsistency faced by crypto projects and exchanges. [ s_aideroty on Twitter ]
Analyst Note: The growing trend of DeFi platforms blocking VPNs and requiring users to sign messages is sparking concern over security and privacy, as it shifts risk to users who may not fully grasp the vulnerabilities. While wallets like Rabby attempt to mitigate phishing by decoding messages, the normalization of such practices highlights the need for stronger user education in crypto security. Simultaneously, the SEC’s inconsistent stance on what constitutes a “crypto asset security” — especially evident in their ongoing legal cases like Binance — exposes the regulatory uncertainty plaguing the crypto industry. These combined issues underscore the delicate balance between user experience, security, and the pressing need for clearer regulatory frameworks.
Crypto Research
Address Poisoning How it Works
A detailed breakdown of the “address poisoning” scam shows how attackers manipulate transaction histories to trick users into sending crypto to scammer addresses. Prevention Measures: Key suggestions include using the full address when transacting, verifying every detail before sending funds, and using wallets with security features to avoid this increasingly common scam. This reflects the constant need for heightened security awareness in the crypto space. [ DeFiFUDDestroy on Twitter ]
Address Poisoning Scams EXPLAINED: Protect Your Crypto from Sneaky Attackers! 💼🔐 👇
What are the 12-Use Cases of Crypto?
There are 12 known use cases for cryptocurrency, ranging from well-known examples like Bitcoin and stablecoins to more dubious activities like money laundering, investment schemes, and tax evasion. The list also includes tracking these activities as a significant use case. While some argue the value of crypto, there are contrasting views on its purpose. One user humorously suggests there are only two actual use cases — Bitcoin and “sophisticated scams” — illustrating the ongoing debate around crypto’s legitimacy. [ NFTherder on Twitter ]
Holiday Security Health Check
As the holiday season approaches, the risk of crypto hacks and drains increases. This warning highlights common mistakes such as failing to perform personal security audits, traveling with vulnerable devices, and approving transactions when distracted. Simple yet crucial steps like changing passwords, revoking approvals, and avoiding transactions when fatigued or impaired can help mitigate these risks. Regular audits and cautious behavior are essential for safeguarding your crypto assets, especially during high-risk times like the holidays. [ nft_dreww on Twitter ]
Monthly Security Checks in Web3 Ideas
A security tip emphasizes the importance of performing regular personal security checks, especially for those in the Web3 space. The recommendation includes a monthly review of connected apps, sessions, and account settings across platforms like Twitter, Discord, and email to avoid malicious threats. Specific actions, such as using an authenticator app instead of SMS for two-factor authentication and logging out of old devices, can significantly enhance account security. The tip encourages users to take these steps seriously to reduce the risk of being hacked. [ nft_dreww on Twitter ]
Good Web3 Security Review Twitter Space:
Web3Gaming Scammers — How to Spot them?
The framework for Web3 gamers outlines essential cybersecurity techniques to protect against scams and malware. It emphasizes keeping software updated, using reputable endpoint defense like Warden, enabling two-factor authentication, and being vigilant of phishing attempts. The framework also includes case studies of scams such as the “Guardians of Throne” and “Blast Royale” impersonation scams, where cybercriminals used fake games and social engineering tactics to deceive players into downloading malware. Key lessons include verifying game legitimacy, monitoring suspicious social media activity, and recognizing red flags like urgency tactics and unrealistic offers. Advanced cybersecurity tools like Warden, which offer zero-trust protection, are critical for defending against emerging threats in Web3 gaming. [Rogue Realms: The Rise of Sophisticated Web3 Gaming Scammers by Cyber Strategy Institute ]
Analyst Note: Investigations into past crypto exploits, like the Ethereum DAO hack and MyEtherWallet’s connections to Silk Road, paint a troubling picture of some major figures in the space. With ties to illicit activities now surfacing in blockchain forensics, there’s an unsettling trend of perpetrators becoming investigators. This hypocrisy erodes trust in blockchain analysis and regulatory enforcement, calling for more rigorous oversight of those tasked with maintaining the system’s integrity.
Conclusion
The findings presented this week raise critical questions about the very foundations of the crypto industry. Whether it’s the alarming concentration of Ethereum’s initial coin offering, the unspoken power held by major exchanges, or the role of illicit actors in shaping the future, it’s clear that much of what drives this space happens behind closed doors. The analyst’s investigation brings attention to the pervasive influence of early adopters, insider corruption, and regulatory blind spots. The big takeaway is that while the promise of decentralization lies at the heart of crypto, much of the industry’s power remains concentrated in the hands of a few key players who operate in the shadows. The challenge now lies in shedding light on these forces and holding them accountable for the future of the ecosystem.
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