Address Poisoning Scam: How a Simple Mistake Cost a Trader $50 Million

A recent incident has highlighted the risks facing cryptocurrency users when it comes to transferring funds. A crypto trader lost nearly $50 million in USDT due to an address poisoning scam, where they accidentally copied a fraudulent wallet address from their transaction history. This was reported by the blockchain security firm SlowMist.

Key Takeaways

A trader lost nearly $50 million in USDT due to an address poisoning scam.
The fraudulent wallet address closely resembled the intended recipient's address.
The incident highlights the importance of double-checking wallet addresses before transfers.
Crypto scams have led to losses of nearly $90 billion in the industry.
A federal task force is being proposed to combat increasing crypto-related fraud.

The victim mistakenly transferred 49,999,950 USDT to a wallet controlled by the attacker, which closely resembled the intended address, sharing the same first three and last four characters. The stolen funds were quickly converted into ETH, spread across several wallets, and partially funneled through the Tornado Cash mixer.

For context, the victim’s wallet had been active for about two years, primarily used for USDT transactions. Notably, the compromised funds had been withdrawn from Binance shortly before the victim made the poisoned transfer.

Crypto Scams Reach Unprecedented Heights

This incident exemplifies a larger security crisis in the cryptocurrency industry, which has seen nearly $90 billion lost to hacks and scams since its inception. In November alone, over $276 million was stolen, causing 2025 losses to surpass $9.1 billion. This indicates that approximately 10% of all historical crypto losses have occurred within the last year.

Mitchell Amador, the CEO of Immunefi, has highlighted a significant shift in the threat landscape. He stated that “the threat landscape is shifting from onchain code vulnerabilities to operational security and treasury-level attacks.” As security measures for code improve, attackers are increasingly targeting human elements.

Despite 2025 being recorded as the worst year for hacks, Amador clarified that these losses primarily stemmed from operational failures rather than vulnerabilities in smart contracts. “While 2025 set records for hacking, the losses often resulted from weaknesses in traditional Web2 infrastructures and failures in operational security, rather than onchain issues,” he explained.

Investment Fraud on the Rise

In 2024, Americans lost around $9.3 billion to cryptocurrency investment scams, reflecting a 66% increase from the previous year, as per FBI data. Particularly, pig-butchering scams resulted in over $9.9 billion in global losses, with Chainalysis reporting a nearly 40% rise in activity during the same period.

To address these issues, U.S. Senators Elissa Slotkin and Jerry Moran have proposed the SAFE Crypto Act. This legislation aims to establish a federal task force that will coordinate efforts among government agencies, law enforcement, and experts in the private sector to fight against crypto-related fraud. The act also proposes that approved stablecoin issuers develop technical capabilities to freeze or seize digital assets linked to illegal activities.

Moreover, enforcement actions have intensified, with U.S. authorities announcing their largest crypto seizure to date in October, targeting the Cambodia-based Prince Holding Group. Additionally, Tether froze nearly $50 million in USDT associated with Southeast Asia's pig-butchering operations, while Binance successfully prevented 7.5 million users from falling victim to nearly $10 billion in fraud between December 2022 and May 2025.

Security Challenges in the Cryptocurrency Space

In addition to sophisticated scams, malware attacks are an ongoing threat, draining unsuspecting wallets. For instance, a Singapore entrepreneur lost over $100,000 after unintentionally downloading malicious software disguised as a game-testing application. In another incident, a multisignature wallet breach resulted in the theft of around $27.3 million due to compromised private keys, with attackers laundering approximately $12.6 million through Tornado Cash.

Mitchell Amador believes that the industry needs to fundamentally rethink its approach to security. “Securing code alone is insufficient if users and operators remain vulnerable,” he cautioned.

He emphasizes that Web3 companies must significantly invest in human-layer security. This includes comprehensive training for teams, improving operational controls, and educating users on identifying scam messages, recognizing social engineering attempts, and safeguarding their assets online. Amador pointed out that 99% of Web3 projects lack basic firewalls, and fewer than 10% utilize modern AI-driven security tools.

“Most hacks this year resulted not from inadequate audits,” he explained. “They occurred post-launch, during protocol upgrades, or through integration vulnerabilities—issues that audits typically cannot address.”

Though losses are escalating, Amador remains optimistic about the potential for onchain code security, forecasting that 2026 will be a landmark year for smart contract safety as the industry continues to improve its technical foundations.