An unknown user became a victim of "address poisoning", as a result of which he lost 1,155 "wrapped" bitcoins worth about $68 million. This was reported in Cyvers Alerts.
Potential fraud was discovered by the AI system of researchers. According to CoinStats, the trader lost more than 97% of his assets.
When an address is" poisoned", attackers trick or use technical tricks to force the user to send cryptocurrency to a deliberately incorrect address, which may be similar to the real one in the first and last characters.
For the first time, the MetaMask team warned about this type of fraud. There is no way to prevent such an attack, so you should carefully copy addresses from the history.
In a similar way, in August 2023, an unknown person stole $55,000 in USDT from the US Drug Enforcement Administration (DEA). The agency made a transfer of confiscated funds, which the criminal noticed.
It detected the first test transaction and quickly created an address similar to the receiving one. After that, the fraudster sent a small amount of tokens to the DEA wallet to be displayed in the list of recent transactions.
Apparently, an inattentive employee of the Department transferred the next batch of funds to the fraudster.
What is a wrapped token?
1 Main thing
* Wrapped token — a "copy" of a cryptoasset issued on another blockchain against the security of the original coin.
* This type of token is provided with the underlying asset in a 1:1 ratio, has the same price and allows you to expand the application possibilities, for example, to trade on decentralized exchanges that do not support the "original".
* The most famous example of a wrapped cryptocurrency is Wrapped Bitcoin (WBTC), issued on the Ethereum network. It is widely used in the field of decentralized finance (DeFi).
2 What are wrapped tokens for?
With the development of the market for decentralized, in particular DeFi-applications, there is a need to transfer liquid crypto assets from one network to another.
This is what wrapped tokens are designed for. By using WBTC, the user gets the value of BTC in the Ethereum or Tron ecosystem. WBTC can be left as collateral for obtaining a loan in stablecoins or used in profitable farming-all this without the need to use centralized exchanges and services.
In addition, WBTC significantly simplifies the work of exchanges, wallets, and services — there is no need to configure individual nodes.
3 How and when did WBTC appear
WBTC is the result of the Wrapped Tokens project, founded by three organizations: BitGo, Kyber Network and Ren. It was first announced in October 2018 and officially launched on January 31, 2019.
The WBTC ecosystem has dozens of well-known certified merchants, including Compound, Maker, Blockfolio, Uniswap, CoinGecko, Aave and 0x — they are responsible for issuing and burning WBTC.
4 How wrapped tokens are created and work
A wrapped token is issued by moving the crypto asset to a special storage facility and then issuing the wrapped token through a special smart contract.
In the example with WBTC, the user must make a transfer of BTC to the specified address in the Bitcoin network, after which the WBTC will be released and moved to the desired address in the Ethereum network.
A special service that stores the underlying asset in a smart contract and is simultaneously responsible for issuing the wrapped version of the token is responsible for issuing the wrapped token. The exchange in the opposite direction occurs by burning WBTC in the Ethereum network and then "unlocking" the collateral in the bitcoin network.
5 What does cross-chain bridges have to do with this?
Cross-chain bridges are a set of automated smart contracts that allow you to transfer assets from one network, storing them in a special storage, to another, by issuing a wrapped token in it.
The main task of bridges is to create compatibility for isolated networks and applications. For example, to start using BTC for farming on the Ethereum network, the user needs to somehow transfer the BTC coin to an ETH address — this is what bridges do.
In the case of WBTC, the full list of trusted bridges can be found on the Wrapped BTC website.
Potential fraud was discovered by the AI system of researchers. According to CoinStats, the trader lost more than 97% of his assets.
When an address is" poisoned", attackers trick or use technical tricks to force the user to send cryptocurrency to a deliberately incorrect address, which may be similar to the real one in the first and last characters.
For the first time, the MetaMask team warned about this type of fraud. There is no way to prevent such an attack, so you should carefully copy addresses from the history.
In a similar way, in August 2023, an unknown person stole $55,000 in USDT from the US Drug Enforcement Administration (DEA). The agency made a transfer of confiscated funds, which the criminal noticed.
It detected the first test transaction and quickly created an address similar to the receiving one. After that, the fraudster sent a small amount of tokens to the DEA wallet to be displayed in the list of recent transactions.
Apparently, an inattentive employee of the Department transferred the next batch of funds to the fraudster.
What is a wrapped token?
1 Main thing
* Wrapped token — a "copy" of a cryptoasset issued on another blockchain against the security of the original coin.
* This type of token is provided with the underlying asset in a 1:1 ratio, has the same price and allows you to expand the application possibilities, for example, to trade on decentralized exchanges that do not support the "original".
* The most famous example of a wrapped cryptocurrency is Wrapped Bitcoin (WBTC), issued on the Ethereum network. It is widely used in the field of decentralized finance (DeFi).
2 What are wrapped tokens for?
With the development of the market for decentralized, in particular DeFi-applications, there is a need to transfer liquid crypto assets from one network to another.
This is what wrapped tokens are designed for. By using WBTC, the user gets the value of BTC in the Ethereum or Tron ecosystem. WBTC can be left as collateral for obtaining a loan in stablecoins or used in profitable farming-all this without the need to use centralized exchanges and services.
In addition, WBTC significantly simplifies the work of exchanges, wallets, and services — there is no need to configure individual nodes.
3 How and when did WBTC appear
WBTC is the result of the Wrapped Tokens project, founded by three organizations: BitGo, Kyber Network and Ren. It was first announced in October 2018 and officially launched on January 31, 2019.
The WBTC ecosystem has dozens of well-known certified merchants, including Compound, Maker, Blockfolio, Uniswap, CoinGecko, Aave and 0x — they are responsible for issuing and burning WBTC.
4 How wrapped tokens are created and work
A wrapped token is issued by moving the crypto asset to a special storage facility and then issuing the wrapped token through a special smart contract.
In the example with WBTC, the user must make a transfer of BTC to the specified address in the Bitcoin network, after which the WBTC will be released and moved to the desired address in the Ethereum network.
A special service that stores the underlying asset in a smart contract and is simultaneously responsible for issuing the wrapped version of the token is responsible for issuing the wrapped token. The exchange in the opposite direction occurs by burning WBTC in the Ethereum network and then "unlocking" the collateral in the bitcoin network.
5 What does cross-chain bridges have to do with this?
Cross-chain bridges are a set of automated smart contracts that allow you to transfer assets from one network, storing them in a special storage, to another, by issuing a wrapped token in it.
The main task of bridges is to create compatibility for isolated networks and applications. For example, to start using BTC for farming on the Ethereum network, the user needs to somehow transfer the BTC coin to an ETH address — this is what bridges do.
In the case of WBTC, the full list of trusted bridges can be found on the Wrapped BTC website.
