Tables Turned: $9.3 Million Returned By Phishing Scammer

Phishing Scammer Returns $9.3M: A Rare Crypto Restitution Story

In an unexpected turn of events, a phishing scammer has returned a significant portion of stolen funds to a victim nearly ten months after a major heist. The scam, which originally resulted in a $24 million theft, saw the return of approximately $9.3 million in Dai stablecoin across two separate transactions. July 13 highlights a rare instance of restitution in the world of cryptocurrency fraud.

What's the News?

The scammer returned the funds in two transactions, the first amounting to $5.23 million on 8th July followed by another $4.04 million on 13th July. Etherscan data confirmed these transactions, showing the funds being transferred back to the victim through Railgun Relay, a privacy protocol intermediary.

The victim, who fell prey to the phishing scam on September 6, 2023, lost 9,579 Lido Staked Ether (stETH) and 4,850 Rocket Pool (rETH) tokens. The scam involved the victim unknowingly granting token approvals to the scammer via “Increase Allowance” transactions, allowing the scammer to siphon off the tokens. At the time of the theft, the $9.3 million returned represents about 38.4% of the stolen funds, but given today's market values, the staked Ether alone would be worth around $47.5 million.

Interestingly, the scammer contacted the victim from a different wallet address on July 6, admitting to the theft and expressing a desire to return the money. Following the return of funds, the scammer’s wallet balance, visible on Etherscan showed a little over $3 million with a significant portion consisting of the METAGALAXY LAND (MEGALAND) token from the BNB Chain.

Final Thoughts

Phishing scams remain a significant threat within the cryptocurrency industry. According to Scam Sniffer’s 2023 Wallet Drainers Report, phishing scams accounted for nearly $300 million in stolen funds from 324,000 victims in 2023 alone. Notorious groups like Inferno Drainer and MS Drainer have been responsible for substantial thefts with Pink Drainer alone stealing over $85 million before ceasing operations in May.

Despite these alarming figures, the cryptocurrency market has shown resilience, with a record recovery rate of 77% for stolen funds in the second quarter of 2024. Hacken’s Web3 Security Report Q2 2024 noted that $347.4 million of the $512.9 million lost was successfully recovered or frozen.

However, cryptocurrency scams continue to thrive on social media platforms like X (formerly Twitter). Nearly $50 million is lost each month due to account impersonation on X.com. Binance co-founder Yi He recently voiced concerns about the rise of cryptocurrency scams on the platform, urging Elon Musk to take action.

The return of $9.3 million in stolen funds is a rare positive development in the ongoing battle against cryptocurrency fraud, highlighting both the vulnerabilities and the potential for restitution within the digital finance space.

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