What a $440,000 Attack Reveals About the Growing Threat of “Permission” Scams on Ethereum

Source: PortaldoBitcoin Original Title: What a $440 million attack reveals about the growing threat of “permission” scams on Ethereum Original Link: A hacker stole over US$ 440,000 in USDC after the owner of a wallet signed, unknowingly, a malicious “permission” signature.

The theft occurs amid a rise in losses from phishing. About US$ 7.77 million were lost by more than 6,000 victims in November, representing a 137% increase in total losses compared to October, despite a 42% decrease in the number of victims.

“The whale hunting has intensified, with a maximum loss of US$ 1.22 million (permission signature). Despite the reduction in attacks, individual losses have increased significantly.”

What are permission scams?

Permission-based scams involve tricking users into signing a transaction that appears legitimate but actually grants the attacker the right to spend their tokens. Malicious decentralized applications (dapps) can disguise fields, falsify contract names, or present the signing request as something routine.

If a user does not carefully examine the details, signing the request grants the attacker permission to access all of the user’s ERC-20 tokens. Once permission is granted, scammers typically drain the funds immediately.

This method exploits Ethereum’s permission function, which was designed to facilitate token transfers by allowing users to delegate spending rights to trusted applications. This convenience becomes a vulnerability when these rights are granted to an attacker.

“What’s particularly tricky about this type of attack is that the attacker can perform both the permission and token transfer in a single transaction (a ‘smash and grab’ approach) or they can gain access through permission and then remain inactive, waiting to transfer any added funds later (as long as they set a sufficiently long access window in the permission metadata).”

“The success of this type of scam depends on you signing something without fully understanding what will happen. It all comes down to human vulnerability and exploiting people’s naivety.”

There are many examples of high-value, high-volume phishing scams created to deceive users into signing something they don’t fully understand. These scams are often disguised as free money giveaways, fake project landing pages to connect your wallet, or fraudulent security alerts.

How to protect yourself

Digital wallet providers have implemented more protective features. MetaMask, for example, warns users if a site looks suspicious and attempts to translate transaction data into human-readable language. Other wallets also highlight high-risk actions. But scammers continue to adapt.

Users are advised to verify sender addresses and contract details. “This is the clearest way to know if the protocol does not match the actual destination of the funds, as someone is probably trying to steal them. You can check the value; often, they try to grant unlimited approvals.”

Vigilance remains the best defense for users. “The best way to protect yourself from ‘permit’ scams is to ensure you know what you are signing. What actions will actually be performed in the transaction? Which functions are being used? Do they match what you thought you were signing?”

“Many wallets and decentralized applications have improved their user interfaces to ensure you don’t sign blindly and can see the outcome, as well as display warnings about high-risk functions. However, it’s important that users actively verify what they are signing and not just connect their wallet and click sign.”

Once stolen, recovering funds is unlikely. In phishing attacks, you are dealing with an individual whose sole goal is to steal your funds. There’s no negotiation, no point of contact, and often no idea who the other party is.

“These attackers play with the numbers. Once the money is gone, it’s gone forever. Recovery is essentially impossible.”