As a crypto investor with a few years of experience under my belt, I’ve seen my fair share of scams and fraudulent activities in the crypto space. The latest one to make headlines is the Inferno Drainer team’s failed attempt to launder over $540,000 worth of ETH using Railgun’s privacy protocol.
The group responsible for operating Inferno Drainer, a well-known cryptocurrency fraud platform, was unsuccessful in concealing a significant transfer of ETH due to Railgun’s effective implementation, which prevented the transaction from being processed privately.
Based on the report from cybersecurity company MistTrack, the perpetrators behind the subscription-linked malware made an attempt to clean over 175 Ether, equivalent to around $540,000 as of now, on July 9.
Scam Sniffer’s tracking system identified a potential scam when it detected the transfer of 365.7 ETH by an individual associated with Inferno Drainer.
I analyzed the transaction data and found that approximately 190.7 Ether were transferred to the wallet with the address “0x0fc2e”. The remaining amount was sent to a smart contract wallet associated with Railgun.
Railgun is a privacy-focused protocol for blockchains that conceals transaction details using advanced cryptographic techniques. Specifically, it utilizes Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (ZK SNARKs), a form of zero-knowledge proof (ZKP) technology. This technology enables the verification of on-chain data without disclosing the underlying information itself.
In this setup, users have the capability to conceal their cryptocurrency wallet addresses. Hiding these addresses could theoretically attract ill-intended individuals seeking to elude law enforcement.
In this situation, Inferno Drainer’s financial transaction was denied by Railgun’s automated Private Proofs of Innocence (Private POI) system. This system functions as a verification mechanism to ensure the legitimacy of transactions.
Railgun’s POI system, launched in 2023, ensures the authenticity of tokens transferred to its smart contract by employing cryptographic techniques. This means that tokens coming from prohibited addresses are identified and rejected.
When you employ the ZK proof in this system, it generates an affirmation on its own, demonstrating that your tokens haven’t been involved in any previously defined transactions or linked to specific wallets.
Though this function didn’t contribute to the restoration of the lost funds, it returned the funds to the attacker’s wallet, thereby blocking their ability to cash out the funds.
Up to the present, Inferno Drainer has set up more than 9000 deceitful websites for phishing purposes. This service has focused on various crypto and NFT initiatives including Arbitrum, Optimism, MetaMask, OpenSea, LayerZero Labs, among others.
The service charges 30% for making phishing websites and another 20% for each successful theft.
Based on data from Dune Analytics, it’s estimated that the malware has stolen approximately $180 million in cryptocurrency from around 189,000 affected individuals since its emergence in August 2023.
Last year, the group managing the fraudulent service made an unexpected announcement on Telegram that they would be shutting down their operations. They advised their followers to be wary of anyone pretending to take over from them.
Recently, Railgun has found itself embroiled in debates due to accusations of money laundering involving North Korean hackers. However, the project has denied these allegations. Furthermore, Ethereum co-founder Vitalik Buterin has shown support for Railgun, emphasizing that privacy is a standard aspect of modern technology.
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2024-07-11 12:15