Crypto-scam involving ‘fake approvals’ busted at Revoke
- The crypto scam surfaced when several Revoke users saw unidentified approval transactions in their transaction history.
- The platform has addressed the issue by adding a check on approvals with exorbitant gas fee.
Token approval platform Revoke.cash witnessed a unique crypto scam around “fake approvals” on 8 July. The company revealed on Twitter that it received reports of users seeing unidentified approval transactions in their transaction history, which ended up being a scam attempt.
Yesterday, we received reports of people seeing unknown approval transactions in their transaction history.
It turns out that this is a new scam where scammers use so-called gas tokens to steal money when victims revoke these “fake approvals”. pic.twitter.com/vpY2sGIv0T
— Revoke.cash (@RevokeCash) July 9, 2023
It turned out that the scam involved baiting crypto users into revoking fake token approvals with “gas tokens”. The users then ended up paying excessively high transaction fees. So, how does this work?
The idea of “gas tokens” was created a few years ago when gas fees went up on Ethereum [ETH]. Users could mint gas tokens while fees were low and burn them when fees were high, essentially ‘locking in’ the lower gas fees. Though it is no longer feasible on Ethereum itself, there are a number of Ethereum Virtual Machine (EVM) chains where users can trade gas tokens.
This is the junction at which the scammers took advantage of the active users on Revoke.cash. The platform explained,
These scammers created fake tokens that they airdropped and created fake approvals for these tokens, which people think they need to revoke. But the scammers programmed these fake tokens so that it mints a lot of gas tokens during a revoke transaction. These gas tokens are then sent to the scammers, who can sell them.
The platform said that it addressed the issue by introducing a check that prevents approvals from being revoked if the gas fee is exorbitant. It encouraged consumers to ignore fake approvals.
One crypto scam makes way for another?
But how did this scam occur?
On 7 July, the cross-chain protocol Multichain experienced an exploit of nearly $130 million due to a hack.
The lockup assets on the Multichain MPC address have been moved to an unknown address abnormally.
The team is not sure what happened and is currently investigating.
It is recommended that all users suspend the use of Multichain services and revoke all contract approvals…
— Multichain (Previously Anyswap) (@MultichainOrg) July 6, 2023
Soon afterwards, a Twitter user alerted the community about an interesting development taking place. Following the Multichain exploit, several platforms like Revoke began taking precautions and urged it users to revoke their approvals for the Multichain protocol.
It was during such a precarious time that the scammers sensed an opportunity and defrauded Revoke users.