Scammers target crypto exchanges with fake stablecoins on TON

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As a seasoned blockchain security analyst with several years of experience in the industry, I cannot stress enough the importance of crypto exchanges being vigilant against malicious actors trying to flood their systems with fake tokens. The recent surge in such activities on the TON network is alarming and should not be taken lightly.

Crypto exchange security teams are being advised by blockchain specialists to carefully examine deposits due to an increase in malicious activities on the TON network, where fraudsters are attempting to swamp exchanges with counterfeit tokens.

Malicious actors seem to be ramping up their efforts to deceive crypto exchange systems by manipulating deposit functions, specifically involving fake USDT transactions on the Open Network (TON). Scammers are taking advantage of this situation as Tether broadens its stablecoin support on the network. According to blockchain security firm Dilation Effect, these malicious actors have been overwhelming exchanges with a significant volume of fraudulent USDT transactions.

Based on my analysis of on-chain activity reported by crypto.news, it appears that a malicious actor has been attempting to deceive multiple exchanges, including Binance, Bybit, MEXC, and Gate.io, by using fraudulent tokens on the TON blockchain. These tokens were created through the deployment of a counterfeit USDT smart contract on TON, which was designed to mimic the metadata of the genuine smart contract. As a researcher specializing in blockchain analysis, I find this behavior alarming and recommend heightened vigilance from exchanges and their users.

As a blockchain analyst, I’ve noticed that while fake deposit scams are relatively uncommon in the cryptocurrency industry, I issued warnings about this potential threat as early as 2023.

Before getting started, let’s clarify the basics of making deposits on trading exchanges. Generally speaking, the procedure goes as follows:

— SlowMist (@SlowMist_Team) July 28, 2023

During that period, analysts from blockchain company SlowMist pointed out distinct features of TON transactions. They mentioned that almost all messages exchanged between smart contracts internally should be capable of being “returned,” meaning if the intended smart contract does not exist or encounters an uncaught error, the message will revert back to the initial account.

If an attacker attempts to transfer funds to an account without a deployed contract, the amount deposited, minus the handling fee, will be automatically returned to the original account by the exchange, due to the absence of a contract for processing the transaction. Consequently, the exchange records a deposit, but the deposited currency ultimately goes back to the attacker’s account.

The company acknowledged back then that “nearly all blockchains encounter the issue of fraudulent deposits,” stating that the TON blockchain is not immune to this challenge.

There’s been no evidence that recent scamming attempts have yielded profits for malicious actors. However, past incidents show that trading platforms have fallen victim to fraudulent activities involving fake tokens. For instance, as cryptonews.com previously reported, a contract update for the GALA token uncovered a vulnerability that hackers exploited. After the upgrade, these hackers managed to deceive Coinhub, a Mongolian cryptocurrency exchange, by making false deposits of fake GALA tokens. Consequently, they withdrew all the genuine GALA tokens from the exchange.

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2024-06-21 16:10