Collaborative U.S.-Canadian operation blocks $4.3M approval phishing attack on Ethereum wallet users

A collaborative U.S.-Canadian operation has blocked a $4.3 million approval phishing attack on Ethereum wallet users. The U.S. Secret Service and Canadian law enforcement agencies tracked down and notified the victims.

A joint U.S.-Canadian operation has reportedly blocked a $4.3 million approval phishing attack on Ethereum wallet users. The U.S. Secret Service and Canadian law enforcement agencies tracked down and notified the victims.

The authorities identified several blockchain addresses that were compromised or vulnerable to exploitation. Scammers use approval phishing to deceive users into authorizing token transfers, after which the fraudsters can access and drain the wallets.

These criminals often carry out these scams through social engineering methods, including the “pig butchering” romance scam. Once a victim approves a malicious transaction request, the attackers gain complete control of their assets.

Operation Avalanche focused on fraudulent transactions on the Ethereum network. Investigators worked with blockchain analysts to identify the wallets affected in the phishing scheme. The team then contacted the wallet holders to warn them about the threat and protect their assets.

The operation involved multiple law enforcement agencies in Canada and the U.S. to halt the ongoing fraud. The B.C. Securities Commission and the U.S. Secret Service took the lead in this initiative. Additionally, provincial police forces and securities regulators contributed their expertise and resources to the operation.

Analysts from the Washington Field Office of the Secret Service provided technical and forensic support for the investigation. The Canadian agencies collaborated with the Secret Service to identify the stolen funds and mitigate future threats. This cooperation helped in tracking the transactions and analyzing the scammers’ methods.

Officials mentioned that the hacked wallets had approved token transfers to malicious addresses through their token approval process, allowing the fraudsters to maintain control even without the victims transferring funds directly.

These scammers exploited the granted permissions to operate undetected and circumvent standard security alerts.

Chainalysis data shows that approval phishing has led to approximately $2.7 billion in cryptocurrency losses between 2021 and 2024. However, the actual total loss could be even higher as many cases go unreported. These scams are sophisticated and can affect individual users and decentralized organizations (DAOs).

The Ethereum network has seen significant losses due to approval phishing, with one notable instance being the $120 million attack on Badger DAO. The scammers often target wealthy NFT collectors and active crypto users.

Attackers capitalize on user trust and limited understanding of wallet permissions. In one case, an influencer fell victim to a romance scam over two years ago, leading to the loss of $2.6 million in cryptocurrencies.

The operation highlights the importance of international cooperation in disrupting transnational crypto fraud and cybercrime. The investigators worked with a blockchain analysis firm and a cryptocurrency exchange to monitor the suspicious wallet transactions. This initiative led to the dismantling of several criminal networks.