Earlier this year, the US Drug Enforcement Administration (DEA) found itself ensnared in a common cryptocurrency scam, leading to a loss of more than $50,000 in digital assets that it had confiscated during a three-year investigation involving suspected drug proceeds laundering through digital currencies.
In May, the DEA seized approximately $500,000 in Tether, a dollar-linked cryptocurrency, from two Binance accounts suspected of funneling illegal narcotics gains. This currency was stored within DEA-controlled accounts, safeguarded in a Trezor hardware wallet, and secured in a designated facility.
However, an opportunist scammer was closely monitoring the blockchain and pounced when the DEA conducted a trial transfer of $45.36 worth of Tether to the United States Marshals Service, a standard procedure for asset forfeiture. The scammer rapidly set up a cryptocurrency address mirroring the Marshals account’s first five and last four characters. Exploiting this fake address, the scammer airdropped a token into the DEA’s account, mimicking the test payment sent to the Marshals. This subterfuge aimed to convince the DEA that the scammer’s address was, in fact, the genuine Marshals service’s address.
Although cryptocurrency addresses are lengthy, users usually copy and paste them instead of manually typing them out. Airdropping, a legitimate cryptocurrency feature, was exploited by the scammer, who managed to deceive the DEA into sending over $55,000 to the fraudulent address in a single transaction.
Upon realizing the scam, the Marshals alerted the DEA, prompting the agency to request Tether operators to freeze the bogus account. Unfortunately, Tether officials confirmed that the funds had already been withdrawn.
This incident serves as a stark reminder of the necessity to verify transactions meticulously, especially when substantial sums of money are involved. It underscores the importance of exercising caution and seeking additional validation to prevent falling victim to such scams in the volatile realm of cryptocurrency.