You may or may not have heard the phrase “dusting attack,” but if you have holdings in crypto – you need to understand and be wary of them. Hackers or scammers use the dusting attack to steal and identify owners of wallets. What the attackers do is scan blockchains for a large number of public addresses over a specific time period with large transactions of a specific cryptocurrency they’re targeting.

At which point, they typically send a very small, almost imperceptible amount of the target crypto to all the target addresses – the tiny amount of crypto is so small that it’s referred to as “dust” – hence the name dusting attack. They then wait to watch for any blockchain transactions that involve the dust. As a precautionary measure, hackers can confuse hackers by obtaining multiple public keys from a digital wallet. The attackers then use analytic monitoring software that alerts them whenever dust deposits are consolidated or moved to another address, wallet, exchange or address.

The dust deposits might be mistaken by wallet owners as income earned from their holdings or an airdrop. The wallet owner can either proactively consolidate fractional cryptos, or they may do so automatically. This then links small dust deposits together. That action gets caught in the scammers’ digital dragnet, triggering the next phase of heavy duty malicious programming being used to re-identify the pseudonymous wallet owner. Once hackers know the identity of the wallet owner, the “black hats” can deploy their typical tradecraft of direct/indirect theft, blackmail, ransomware, or extortion.

This past weekend a suspected dusting attack occurred within the largest crypto-sub group on Reddit, here’s a screenshot of the post describing what happened.

Possible signs you’ve been attacked

The unexplained existence of small amounts of coins or tokens that cannot be used, or withheld from their owners is a sign of a dusting strike. If you don’t combine the dust with your funds and move it, your data and privacy should be fine – the hackers have no way to track a transaction that doesn’t occur. Most digital wallets combine the address balances of all accounts when you make a transaction. Your wallet security team should confirm that the digital wallet functions this way. If so, go through your transaction history, see if any dusting deposits occurred, and engage the wallet’s security operations group if necessary.

Keep in mind that hackers are trying to obtain personal data as well as IP addresses, to help them re-identify those who own the wallets. It’s possible you missed the tiny dust deposits in your account, so a telltale sign of a dusting infiltration would be an influx of spam emails. These spam emails may start appearing suddenly. Then contact the wallet’s security team to find the best path forward or move all your coins/tokens to a cold storage wallet off the blockchain.

Binance Academy provides a great example of a dusting attack that uses its own blockchain. A dusting attack took place in October 2020. This was when extremely small amounts of Binance coin were sent to several wallets. Once the user had sent and consolidated the dust, they were sent a confirmation message of the transaction. The memo had a link with an enticing offer that was actually a malware link – see the red box below for an example. Don’t click on suspicious links connected to crypto transfers.

What to do if you’re attacked

If you confirm any of the signs above or believe you’ve been a target of a dusting attack, here’s what you need to do:

• Get in touch with your wallet provider immediately to discuss any details. Most likely, they will require you to create a brand new wallet and transfer your digital funds from one address.
• You must ensure that your dust deposits do not combine with any funds.
• Don’t take these steps on your own – be sure to cooperate with your wallet provider regarding best practices to guarantee the new wallet is set up properly and your new private keys are secure.

To The Flipside

• Don’t let greed, the desire for instant wealth, and “fear of missing out” cloud your judgement.
• Investing in crypto – just as with any other asset class requires independent research. Solid projects should have solid use cases and proven leadership. They also need to demonstrate a track record of success.
• You should avoid any unsolicited offers to increase your deposit by doubling it, and other promotions.

What are the reasons to care?

Hackers are constantly finding new ways to seize your money. Protecting your investments and savings requires diligence, no matter whether you are using crypto or fiat currency.

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