Australian federal police to probe 2,000 exploited crypto wallets

The Australian Federal Police says its investigating losses from a spate of crypto phishing scams, which have impacted at least 2,000 Australian-owned crypto wallets.

It follows a Chainanalysis investigation — named Operation Spincaster — which found thousands of crypto wallets belonging to Australians had been exploited via “approval phishing” tactics.

“The intelligence we have gathered collaboratively throughout Operation Spincaster has shed a clear light on new tactics being used by cybercriminals in their continued efforts to defraud Australians,” AFP Detective Superintendent Tim Stainton said in an Aug. 4 statement.

“It will form a key part of our ongoing investigations to identify cybercrime victims and disrupt offenders in Australia.”

Operation Spincaster targets these approval phishing scams through education, tools, and training.

Approval phishing scams involve the scammer tricking the user into signing a malicious transaction that allows the scammer to transfer the victim’s tokens to the wallet address of their choice.

It is most common in fraudulent investment schemes offering high returns or romance scams, often referred to as pig-butchering scams.

Victims have lost approximately $4 billion from approval phishing scams since May 2021.

Chainalysis is working with the AFP’s Policing Cybercrime Coordination Center to resolve ongoing investigations.

The collaboration comes after PCCC staff hosted a workshop with Chainalysis to dive deeper into Operation Spincaster and how to better protect Australians.

“The workshop involved Chainalysis sharing intelligence about compromised wallets, training on tracing stolen funds, guidance on detecting ongoing scam attempts in real time, and discussions about how to contact and support victims of approval phishing.”

Cryptocurrency exchanges BTC Markets, Binance, Crypto.com, Ebonex, Independent Reserve, OKX, SwyftX, and Wayex are also working to prevent Australians from these scams, the AFP noted.

Australian banks have taken cryptocurrency scam prevention into their own hands over the last 12 to 14 months — imposing restriction or complete blocks on transfers to cryptocurrency exchanges.

That includes the “Big 4” banks — Commonwealth Bank, National Australia Bank, Westpac and Australia and New Zealand Banking Group — Bendigo Bank, and more recently HSBC.

Australians lost up to $840 million in investment scams in 2023, according to the country’s competition and consumer regulator.