Cryptocurrency Wallet Drained - Twice! 21,000 USD gone.
This is the story of a cryptocurrency user who got a cryptocurrency wallet drained TWICE.
Unfortunately, this person didn't have the tools or knowledge to prevent hacking his wallet and losing Crypto assets for a total value of 21,000 USD.
Summary of the Incident
The whole story can be read on Reddit, but here is a summary for those who do not have that much time:
- Person X clicked on a phishing link, approved a malicious transaction (smart contract), and the wallet crypto assets were stolen (drained).
- During this first hack, the user lost 13,000 USD to the wallet drainer,
- Person X decided to add Biometric 2FA authentication to the crypto wallet to prevent the same situation from happening again and proceeded to add additional crypto assets to the same wallet.
- The wallet got drained again, and the user lost 8,000 USD.
What went Wrong?
First, Person X clicked on a phishing link and approved a smart contract without understanding it.
We all need to be extremely careful when approving any blockchain transaction (smart contract):
- We all must read and fully understand any smart contract before approving it.
- Or do we need to use web3 security tools* that automatically review smart contracts and warn us about dangers like wallet drainers?
- However, the best solution is to combine our knowledge (understanding the contract) and good practices (using web3 security tools) to prevent falling from such hacks.
*For example, Wallet Guard Extension - How To Proactively Secure Your Crypto Wallet
Second, Person X didn't know that once approval has been granted to a malicious contract, it remains valid until revoked. This is why the wallet drained twice; the 2FA didn't prevent it.
Two-factor authentication is a very good security measure everyone should consider implementing when possible. However, it does not protect against malicious smart contract approvals.
Once again, so this very important point is fully understood: Once you approve a malicious contract, it remains active until it is REVOKED.
In the post, Person X provided the wallet address of the drained wallet.
Using Revoke.cash, we can have a look at all the approvals that Person X granted to this wallet:
If this was our wallet and we had or planned to have any valuable crypto assets, we would revoke all those transactions.
In the same post, Person X provided a second wallet address, hoping that someone could provide some small support to balance the losses.
If we analyze this wallet using Revoke, we notice a bunch of approvals, but this time to a reputable hot wallet (Metamask)
Well, having 18,000 USD (or even nearly 3,000 USD - see the approval for CAH token) in a hot wallet is a very high risk, and it may be worth revoking ALL the approvals... or, even better, just transferring those crypto worth 18,000 USD to a cold wallet.
What Can You Do To Prevent Wallet Dainers?
We have provided some hints in the post, but let's sum them up:
- Increase your Web2 and Web3 security knowledge: YOU and your knowledge are the best preventive defense against hacks and scams that will drain your wallets from all the crypto assets you have accumulated.
- Apply good Web2 and Web3 security practices: Some tools warn you when you are about to visit a malicious website (e.g., Wallet Guard Extension), but there are other security practices that everyone should consider, such as creating and using Burner Wallets.
- Keep Yourself Informed: You are reading this post and are already on the correct path.
The five minutes you have dedicated to reading it may save you a lot of future stress, time, and money.
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