Crypto Wallet Drainers and Protecting against Them

6 min read

Learn what crypto wallet drainers are and how to safeguard your assets from these threats.

We have witnessed how cybercriminal activities in the crypto space have grown over the years. Malicious actors have devised numerous methods to misappropriate users' assets. Leveraging both the vulnerabilities of technology and the occasional naivety of users, these agents have become a significant threat to digital security.

Among the most cunning of these are crypto wallet drainers—fraudulent agents or groups intent on scamming users to siphon off their crypto funds.

In this blog, you'll gain insights into how crypto wallet drainers operate, understand their common tactics, and explore some of the most notorious cases of wallet drainers’ activities.

We will also provide you with essential strategies to safeguard your wallets from these deceptive threats, ensuring your digital assets remain secure.

Let’s begin.

Crypto Wallet Drainers: Overview#

Crypto wallet drainers are a severe security threat targeting digital asset holders. Essentially, these are malicious tools or software crafted by cybercriminals to stealthily extract cryptocurrency tokens from your digital wallets. The operation of these drainers is based on exploiting vulnerabilities in the wallet's security or deceiving the wallet owner through sophisticated social engineering and phishing tactics.

The process usually involves tricking the user into performing actions that seem harmless but allow the malware to access, compromise, and transfer the wallet's funds. This could be through email phishing campaigns designed to steal login credentials or by encouraging the installation of malicious smart contracts or also by users unknowingly installing the wrong or unofficial versions of wallet software. Once authorized, the smart contracts redirect funds to the attacker's wallet.

Some attackers also utilize Drainer-as-a-Service platforms. They provide toolkits for less technically skilled individuals to carry out these thefts. And unfortunately, it’s easy to find these services for everyone, available openly, like on Telegram, Twitter, or a simple Google search.

How Crypto Wallet Drainers Work#

Crypto wallet drainers use a variety of tactics to illicitly access and transfer funds from users' digital wallets. These attacks often start with the exploitation of software vulnerabilities or the creation of deceptive setups that mimic legitimate operations.

For instance, attackers might set up fake websites that look strikingly similar to authentic services, complete with offers like airdrops or rewards. These sites lure unsuspecting users with the promise of rewards, only to trick them into clicking on malicious links or buttons. Such actions can unknowingly install malware or redirect funds.

Phishing is another common method where cybercriminals send emails or create websites that impersonate real companies. Cybercriminals trick users into providing their wallet credentials or private keys, deceiving them into believing they are accessing their wallets legitimately. Once attackers obtain these details, they can easily transfer funds out of the wallets without the owner's consent.

Additionally, malware can be secretly installed on user devices to steal credentials directly from the source. This malware works in the background, undetected, capturing every keystroke or wallet access. Attackers also use social engineering tactics to manipulate or deceive users into voluntarily giving away their funds.

Moreover, fake wallet apps pose a significant threat. These apps mimic legitimate cryptocurrency wallet apps and are often found on various platforms for download. Unsuspecting users download and install these, giving attackers direct access to their wallet’s credentials.

A Look at Some Notable Wallet Drainers#

The crypto landscape has witnessed several wallet drainers stealing vast amounts of assets from unsuspecting users. To be more specific, the loss has exceeded $300 million in crypto assets from over 320,000 users.

One significant actor in this realm is Angel Drainer, which emerged in March 2023. This group quickly gained infamy for its diverse scam strategies, managing to siphon over $25 million from users. Their most notable tactic involved social engineering, aimed at domain service providers.

One of their operations was held in September 2023 when they compromised the DNS settings of Balancer, leading to a direct plea from Balancer to its users to avoid the site due to phishing risks. This incident led to a theft of $350,000. Angel Drainer later exploited a verification tool on Etherscan to deploy a malicious contract, tricking users into authorizing transactions that redirected over $400,000 to their own wallets.

Another infamous drainer, Inferno Drainer, started its operations in November 2022 and focused on multi-chain scams. This group was responsible for orchestrating scams that exceeded a total of $80 million in stolen funds. They crafted sophisticated phishing websites that appeared highly legitimate, persuading victims to connect their wallets to what they believed was a secure platform.

The site contained malicious scripts that mimicked popular Web3 protocols and deceived users into authorizing transactions. In this scam-as-a-service model, the operators of Inferno Drainer pocketed 20% of the stolen assets, leaving the orchestrators of the individual scams with 80%.

Furthermore, groups like Pink Drainer, MS Drainer, and Monkey Drainer have adopted a similar business model, offering their services to individuals and phishing teams to facilitate crypto wallet draining. These groups typically demand a significant initial deposit from their clients and claim a 20–30% share of the stolen assets. It illustrates a wider trend where cybercriminals commoditize and make malicious services accessible to a wider range, thereby enhancing the scale and reach of these fraudulent activities.

How to Secure Your Wallets against Crypto Wallet Drainers#

Protecting your cryptocurrency from wallet drainers involves a blend of vigilant practices and smart security measures. Firstly, always use reputable wallet providers and keep your wallet software updated to shield against new vulnerabilities. Make sure you install the legitimate version of the wallets from official sites and applications. In addition, employing two-factor authentication (2FA) adds a crucial extra layer of security, making it tougher for attackers to gain unauthorized access to your wallets.

For storing your private keys safely, opt for secure cold storage methods like hardware wallets or encrypted USB drives. Being vigilant about phishing attempts is also key; always verify the source before clicking on links or sharing sensitive information. Make sure to download wallet applications only from trusted, official sources, and steer clear of third-party downloads. When making transactions, double-check the addresses to ensure they haven’t been altered by any malicious software.

Educating yourself about the latest cryptocurrency scams and the tactics used by attackers is also important. This knowledge is your first line of defense to help you recognize and avoid potential threats. 

Lastly, we emphasize opting for a DeFi insurance solution. It provides coverage against various risks, including smart contract failures, hacking incidents, and other operational risks. If you lose your assets to such incidents by unfortunate chance, you will receive a payout.

About Neptune Mutual#

Neptune Mutual emerges as an innovative platform aimed at enhancing security within the Web3 space. It offers specialized insurance policies that safeguard users’ assets from the inherent risks associated with DeFi space.

Neptune Mutual operates on a parametric model. This means that the payouts are based on parameters rather than proof of loss. If the parameters are triggered by hacks, exploits, or any incident, policyholders will receive payouts.

Our marketplace offers projects to create cover pools on different networks like EthereumArbitrum, and BNB Smart Chain. Project owners looking to protect their communities can reach out to us to create cover pools. This allows their community members to purchase covers from the cover pools and protect their assets.

To know more about Neptune Mutual, follow us on X and chat with us on Discord.