Where you could lose $12 million on OTC Ethereum trades: analysis of an address spoofing attack

OTC traders in the cryptocurrency industry have become one of the main targets for sophisticated cyberattacks. A recent incident where an investor lost 4,556 Ethereum worth approximately $12.4 million clearly demonstrates the scale of the problem. The attack employed social engineering techniques combined with technological vulnerabilities. Blockchain analyst Specter revealed details of this complex crime, finding that such schemes are becoming increasingly widespread.

OTC Traders as the Main Target: Why OTC Transactions Are Especially Vulnerable

OTC (over-the-counter) transactions are conducted outside exchanges, often involving large sums. This category of assets has attracted the attention of hackers. Their goal was to identify deposit addresses used for OTC settlements. Owners of such wallets typically handle huge volumes, meaning that a single mistake can cost tens of millions. Traders accustomed to frequent transactions often rely on interface convenience, making them more susceptible to deception.

32 Hours of Preparation: How the Attacker Created the Perfect Digital Doppelgänger

The attackers conducted reconnaissance for two months, analyzing the target investor’s activity. Then the attack was launched. The hacker used specialized software to generate Ethereum addresses with one purpose — to create a wallet that visually resembled the original. The trick was to match the first and last characters of a long hexadecimal string. Afterward, the attacker sent a minimal amount to the victim’s wallet.

This tiny transaction was the key. It filled the user’s activity log, and the compromised address rose to the top of the recent operations list. When the investor later decided to send $12.4 million via OTC, they copied this “poisoned” entry without noticing the substitution. 32 hours after the initial microtransaction, the fraudulent address received all the funds.

Where the Danger Comes From: Interface Vulnerabilities and Human Factors

User psychology remains the main target. Most people only check the beginning and end of an address, ignoring the middle. This occurs because wallet interfaces often hide the central part of the address to save screen space. Developers focused on convenience have inadvertently created a blind spot in security.

The most serious problem lies in verification procedures. Retail traders often copy addresses from history. But large operators handling millions in OTC deals should implement strict whitelist protocols and conduct test transactions before sending large sums. It appears this investor skipped this critical step.

Two Major Robberies in a Week: Is This Becoming a Trend?

This is already the second case of large-scale theft in a short period. A week earlier, another trader lost about $50 million through a nearly identical address poisoning scheme. The scale of losses indicates that cybercriminals have developed a well-honed methodology. Industry participants are sounding the alarm — such attacks are no longer rare.

Experts from Scam Sniffer, a well-known security organization, issued an urgent warning to the community. They noted that the number of such incidents is increasing proportionally with the growth of OTC trading volumes. Each new case makes the method more well-known, but paradoxically — it only benefits the criminals.

How to Protect Millions: Practical Security Measures for Large Operations

Scam Sniffer strongly recommends abandoning the practice of copying addresses from transaction history. Instead, verified address books that have been checked in advance should be used. For OTC operations, multi-layer verification should be employed: comparing addresses through multiple methods, conducting test microtransactions before the main payment, and using two-factor authentication.

Large players should rely on whitelists — pre-approved recipient addresses stored in a secure database. Test transactions are not a waste of time but a necessary safeguard. Investors dealing with multi-million dollar sums on the OTC market must verify addresses through several independent sources. Technology can offer convenience, but security is ultimately a human responsibility.