CZ Urges Wallet-Level Protections Against $50M Address Poisoning Scams

The urgency behind CZ’s call is rooted in a high-profile incident detailed by on-chain investigators at Lookonchain. On December 20, a crypto trader withdrew a massive sum from Binance and, following common security practice, first sent a 50 USDT test transaction to their own wallet. An attacker, using an automated script, had already generated a spoofed address that closely mimicked the victim’s legitimate one. The fraudulent address matched the first five and last four characters, exploiting a critical vulnerability: the middle section, which many wallet interfaces shorten with ellipses for display.

To ‘poison’ the victim’s transaction history, the scammer sent small, seemingly innocuous transactions from this lookalike address. Roughly 26 minutes after the successful test transfer, the victim, intending to move the full balance, appears to have copied the spoofed address from their polluted history. In a single catastrophic transaction, they sent 49,999,950 USDT to the attacker’s control. According to security firm SlowMist, the thief rapidly laundered the funds, swapping the USDT for DAI, converting it to approximately 16,690 ETH, and funneling most of it through the privacy mixer Tornado Cash to obscure the trail and complicate any recovery.

Responding to this incident, Changpeng Zhao outlined a multi-pronged technical solution he believes can ‘completely eradicate’ address poisoning. His core proposal is for wallet providers to implement automatic, on-chain queries that check whether a receiving address is associated with known poisoning activity before a transaction is signed. If a match is found, the wallet would block the user from proceeding. ‘We can completely eradicate this type of poison address attacks,’ CZ stated, noting that Binance Wallet already issues warnings for such attempts.

To make this defense robust and industry-wide, CZ urged the creation of real-time security alliances. These collaborative groups would maintain and share constantly updated blacklists of malicious addresses, allowing all participating wallets to flag risks proactively. Furthermore, he suggested that wallet interfaces should filter out the spam micro-transactions used to pollute transaction histories, removing the very bait that lures victims into copying fraudulent addresses. This combination of pre-transaction verification and interface hygiene represents a shift from reactive recovery to proactive prevention.

The recent $50 million USDT theft is not an isolated event but part of a dangerous pattern. Last May, a crypto investor lost roughly $68 million worth of wrapped bitcoin (WBTC) in an almost identical scheme. Blockchain data showed that victim also copied a hacker-controlled address from their transaction history after it was poisoned with small deposits. These incidents underscore that the scam’s effectiveness relies on exploiting user behavior—trust in one’s own transaction log—and universal wallet design shortcomings.

The path forward, as championed by CZ, hinges on standardization and collaboration. While individual wallets like Binance’s can implement warnings, a fractured defense is insufficient against automated, scalable attacks. The proposed real-time security alliances would function as a critical piece of infrastructure, much like shared threat intelligence networks in traditional finance. For the industry, the choice is clear: invest in collective, embedded security measures at the wallet level or continue to witness staggering, preventable losses. As the victim of the $50 million scam posted in a desperate on-chain message offering a $1 million bounty for the funds’ return, the human and financial cost of inaction is already far too high.