Dissection of an Approval-Based Trusted-Token Fraud Scheme Used Across Multiple Blockchain Systems

This article examines a type of token high-yield investment fraud based on a technique known as approval phishing. The scheme is further exacerbated by deficiencies in the presentation and validation of token approvals by wallet software. The study presents the findings of an almost year-long investigation into the internal operations of several groups of scammers targeting users worldwide and stealing millions of dollars each month. Over the course of the investigation, the author acquired detailed information about the scammers, their victims, and, most importantly, the fraud scenarios and operational details. Furthermore, the article highlights the critical role of wallet software in accurately presenting and validating smart contract calls. A significant contribution of this work is a comprehensive security analysis and comparison of eighteen popular blockchain wallets from the perspective of approval scams. These results can assist users in selecting the right wallet and, at the same time, aid wallet providers in improving their products. Finally, the article proposes potential security improvements to empower users with the necessary information to identify fraudulent activities.