Scammers target crypto exchanges with fake stablecoins on TON

Blockchain security analysts are urging cryptocurrency exchanges to closely scrutinize deposits as malicious actors step up efforts on the TON network to flood them with fake tokens.

Bad actors appear to be intensifying their attempts to exploit cryptocurrency deposit systems. As Tether expands stablecoin support on the network, scammers are taking advantage of fake USDT transactions on the Open Network (TON). Data from blockchain security group Dilation Effect shows that malicious actors are spamming crypto exchanges with “massive amounts” of fake USDT transactions.

Attempts to deposit fake tokens into TON targeting Binance and Bybit | Source: Tonviewer

According to on-chain activity reviewed by Crypto.news, at least one bad actor is targeting multiple exchanges, including Binance, Bybit, MEXC, and Gate.io, with fake tokens in TON. Blockchain researchers note that the hacker used a fake smart contract on TON designed to spoof the metadata of the official smart contract for USDT.

While fake deposits are not common in the industry, blockchain analysts have previously warned of such attacks in 2023.

1/ To get started, we first need to understand how deposits work on exchanges. The process typically includes:

These steps may seem simple, but they are where fake upload attacks occur. pic.twitter.com/vkiazCvgGl

— SlowMist (@SlowMist_Team) July 28, 2023

At the time, analysts at blockchain firm SlowMist highlighted the unique features of TON transactions, noting that nearly all internal messages sent between smart contracts must be “reversible”; This means that if the target smart contract does not exist or encounters an unhandled exception, the message will “bounce back” to the original account.

“If an attacker makes a transfer to an account without a distributed contract, when ‘bounceback’ is set, the deposited amount will revert back to the original account, minus the transaction fee. SlowMist wrote that the exchange saw a deposit record, but the deposited money returned to the attacker’s account.

However, the firm added that at the time “almost all blockchains were facing the problem of fraudulent deposits” and that the TON blockchain was “no exception.”

While there is no indication that recent activity has resulted in profits for bad actors, there have been cases where scammers have managed to attack trading platforms with fake tokens. As crypto.news previously reported, a contract upgrade for the GALA token created a loophole that hackers could exploit. Following the upgrade, hackers tricked Mongolian crypto exchange Coinhub’s deposit system with fake token deposits and successfully withdrawn all GALA from the exchange.