Tres Finance, a decentralized finance (DeFi) protocol, has warned users about a scam that involves fake tokens designed to mimic legitimate transactions. The scammers attempt to lure unsuspecting users into sending their transactions to the wrong wallet address by creating similar-looking wallet addresses and create tokens that imitate the legitimate ones. The scammers target wallets with large amounts of stablecoins like Tether or USD Coin.
To avoid falling victim to this type of scam, Tres Finance co-founder Tal Zackon recommends that businesses and end-users use a dedicated system to verify assets and third parties they are engaged with. He also suggests keeping track of every transaction and double-checking wallet addresses.
Example of a scam transaction (above) designed to mimic a legitimate transaction (below). Source: Tres Finance
Zackon warned businesses to not use explorers to track their finances. “Do not use explorers to track your financial movements. You have to use a dedicated system that will help you verify the asset, and verify the third party that you’re engaged with,” he said.
The executive extended the warning to end users as well. According to Zackon, he would recommend keeping track of a spreadsheet of the addresses that they are working with. In addition, the Tres Finance co-founder said that it would be better to “double-check each and every transaction” as well as the addresses that users are engaging with.
On Jan. 12, wallet provider Metamask issued a warning about a somewhat similar scheme called address poisoning. With this, scammers send tokens worth $0 to wallets using vanity-generated wallet addresses with similar first and last characters to their targets. This populates their transaction history with fraudulent transactions, hoping that the user will make the mistake of copying and pasting the wallet address when sending a transaction.