Ethereum News Today: EIP-7702’s Power Turned Phishing Weapon, Draining $1.5M in Seconds

A cryptocurrency investor lost $1.54 million in a phishing scam that exploited the Ethereum Improvement Proposal (EIP)-7702 standard. The attack occurred after the victim authorized a batch transaction on a fraudulent DeFi interface that mimicked trusted platforms like Uniswap. Once the transaction was approved, the attacker used EIP-7702 features to drain the wallet of assets, including wrapped Ethereum (wstETH), wrapped Bitcoin (cbBTC), and other tokens nearly instantly. This incident highlights the new opportunities for exploitation introduced by Ethereum’s Pectra upgrade, which allows multiple operations to be executed in a single transaction [2].

EIP-7702 was introduced to enhance Ethereum’s functionality by allowing external accounts to temporarily act like smart contracts, facilitating batch transactions for improved efficiency. However, this same feature has been leveraged by malicious actors to execute phishing attacks. Scammers design fake DeFi interfaces that mirror legitimate platforms, prompting victims to approve what appears to be a standard transaction. In reality, these approvals unlock hidden transfers that drain assets almost immediately. Scam Sniffer, a fraud detection service, reported that many users are unaware of the risks associated with EIP-7702 due to its recent introduction [2].

The phishing scheme is not an isolated case. Similar scams have been reported, with one incident draining around $1 million in NFTs and tokens under similar circumstances. These attacks typically involve disguising malicious contracts as routine DeFi swaps, making them difficult for inexperienced users to detect. Scam Sniffer noted that attackers are increasingly targeting addresses upgraded under EIP-7702, leveraging user inexperience with the new transaction standards. The trend suggests that batch transaction phishing is becoming more common, with multiple victims exhibiting the same pattern of losses [2].

Security experts have warned investors to exercise caution when approving batch transactions and to verify DeFi interfaces before signing. Fake platforms that mimic legitimate services remain a significant threat in the crypto space. While batch transactions enhance user experience for legitimate applications, they also increase the complexity and risk of abuse. Users are advised to limit transaction approvals, use trusted applications, and continuously monitor token permissions to reduce exposure to such attacks [2].

Regulatory frameworks are still catching up with the evolving risks posed by EIP-7702 and similar advancements. The U.S. Securities and Exchange Commission (SEC) has taken steps to address crypto-related risks through initiatives like the Crypto Task Force, but these efforts typically lag behind technological developments. Fintech startups and other market participants are encouraged to implement robust security measures, including advanced threat detection systems, multi-factor authentication, and real-time fraud monitoring. Collaboration with regulators and adherence to compliance standards are also recommended to mitigate the risks associated with new Ethereum features [1].

Source:

[1] How EIP-7702 Opens Doors to Security Vulnerabilities (https://www.onesafe.io/blog/eip-7702-ethereum-scam-security-risks)

[2] Crypto Investor Hit by $1.54M Loss in Phishing Scam ... (https://coincentral.com/crypto-investor-hit-by-1-54m-loss-in-phishing-scam-using-eip-7702/)