What Is a Crypto Dusting Attack and How to Prevent It?

A crypto dusting attack is a type of cyber attack that involves sending a tiny portion of cryptocurrency, known as dust, to several crypto wallet addresses.

Deploying such a minute fraction of a digital asset gives its sender the rare opportunity of prying into the receiver’s wallet address. Dust exists on popular blockchain networks such as Bitcoin, Litecoin, Bitcoin Cash, etc.

Although the dusting attack may have no adverse impact on one’s crypto wallet, it is still relevant to understand the whole concept behind the subject. In this article, we will discuss the following topics:

• What Is a Crypto Dusting Attack?
• Who Performs Crypto Dusting Attacks?
• How Does Crypto Dust Work?
• How to Stop Crypto Dusting
• How to Prevent a Crypto Dusting Attack
• Conclusion

What Is a Crypto Dusting Attack?

A crypto dusting attack is a process where an individual (usually a bad actor) transfers a small amount of cryptocurrency to a large number of user wallet addresses. They often involve multiple transactions sent at similar intervals or in quick succession. The amount may be tiny fractions of a cryptocurrency unit, such as 0.00000546 BTC or 0.001 ETH.

The objective of a crypto dusting attack is to give the sender the opportunity to associate the receiver’s addresses with other addresses, which could potentially lead to uncovering their real-world identity. Such a trail may also reveal links to centralized exchanges and other platforms used by the target.

An attacker conducting a crypto dusting attack seeks access to sensitive information about the users and their wallets. Once they gain insight into crypto wallets and their owners, they find it easier to de-anonymize the wallet holder’s identity. By tracking the movement of the dust, they can also identify which wallets are owned by the same user.

In August 2022, a crypto dusting attack was conducted on over 600 wallet addresses. According to data from the blockchain security firm PeckShield, the DeFi lending protocol Aave blocked several users who received 0.1 ETH, each worth nearly $20, from the sanctioned privacy protocol Tornado Cash.

Another way attackers can use crypto dusting attacks is to send phishing emails to the affected users. For this to work, they will study the transaction patterns of the targeted wallets. They will then send a phishing email disguised as a legitimate cryptocurrency exchange or wallet provider. 

This email may request that the unsuspecting user click a malicious link or connect their Web3 wallets to update or verify the details of their accounts. By clicking such links, a user surrenders their wallet and assets to the bad actor.

In this way, a crypto dusting attack can be a precursor to a phishing attack, giving attackers the information they need to carry out more convincing and targeted phishing scams. Therefore, it is vital for crypto users to be aware of both crypto dusting and phishing attacks and to take appropriate precautions to protect their wallets and personal information.

Who Performs Crypto Dusting Attacks?

Anyone can conduct a crypto dusting attack. All required is access to cryptocurrency and a way to send small amounts to several wallets.

Individuals or groups with malicious intentions can conduct crypto dusting attacks. These attackers are often motivated by financial gain, the desire to steal personal information or other malicious purposes.

Government authorities like tax agencies and law enforcement firms can also deploy crypto dust when investigating money laundering, tax evasion, fraud, and other criminal activities. They can use the data to pinpoint users’ identities, trace the wallets tied to an individual or group, monitor the wallet’s activities, and do other investigative activities.

Blockchain analytics platforms may also conduct dusting attacks for academic purposes. They may use it to crack down on a criminal case in collaboration with the government or a crypto project that has fallen victim to crypto exploits.

Although anyone can potentially carry out a crypto dusting attack, it is necessary to know that it requires some technical knowledge and access to cryptocurrency exchanges. Therefore, most crypto dusting attacks out there are likely to be carried out by individuals or groups with certain expertise in the crypto industry.

How Does Crypto Dust Work?

As mentioned earlier, crypto dust is a small amount of cryptocurrency sent to targeted wallet addresses to divulge their privacy. The dust sent to each wallet is usually less than the transaction fee needed to send it.

These amounts are so small that a user often considers them irrelevant. It is worth noting that users can spend crypto dust that was received in their wallet. Crypto dust can be effective only when the victim spends it.

The process of carrying out a crypto dusting attack can be carried out manually or using automated software tools.

To conduct an attack, an attacker sends the cryptocurrency, analyzes the transaction patterns of the victim’s wallets, and capitalizes on anything discovered from the study, such as the timing and amount of the transactions.

By identifying which wallets belong to the same user, the attackers can gain insights into that user’s transaction history, including the types of cryptocurrency they hold and the exchanges or wallets they use. The information can then be used to craft more targeted phishing emails or attacks to steal the user’s funds or personal information.

In addition to providing information about user wallets, crypto dusting attacks can also be used to manipulate the transaction history of a cryptocurrency. By sending small amounts of cryptocurrency to several wallets, attackers can artificially inflate the transaction volume and create the appearance of increased demand for a particular cryptocurrency.

Overall, crypto dusting attacks are a relatively low-cost way for attackers to gain information about cryptocurrency users and their wallets. While the amount of cryptocurrency involved may be small, the insights gained through a dusting attack can be used to carry out more targeted and convincing attacks aimed at stealing funds or personal information. 

As such, it’s vital for cryptocurrency users to be aware of the risks of crypto dusting and to take appropriate precautions to protect their wallets and personal information.

How to Stop Crypto Dusting

Stopping crypto dusting attacks requires detecting and mitigating the effects of the attack. After considering the meaning of crypto dust, it may seem impossible to protect oneself from receiving crypto dust in a Web3 wallet. However, there are measures that a user can take to reduce the chances of falling prey to crypto dust.

One of them involves the creation of a separate wallet. When users receive crypto dust in their original wallet, they can send it to a different wallet. That way, malicious players behind crypto dust will be frustrated as they cannot monitor the on-chain activities of their intended victims.

Another way is to set up a hierarchical deterministic (HD) wallet. Such a wallet allows users to create new crypto wallet addresses for each transaction, making it difficult for scammers to probe users’ transactions.

Privacy tools can also be used to bolster anonymity and security. These tools make it difficult for dust senders to trace the receiver’s transactions. An example of such a protocol is The Onion Router (TOR).

Another necessary step to take is to avoid sketchy crypto airdrops. Many malicious players capitalize on the rising trend of memecoins (shitcoins) to deploy crypto dust. They do this by promoting a fake crypto project, urging users to submit their wallet addresses or interact with an illicit smart contract to receive a reward. Anyone who complies becomes vulnerable to crypto dust, which can eventually be used to conduct large attacks.

The use of dust conversion services is another way to mitigate crypto dusting. Dust conversion services convert crypto dust into a more usable form, often into the native token of the platform or exchange. 

For example, suppose you have dust in different cryptocurrencies like Bitcoin or Ethereum. In that case, the service can convert them into the native token of the platform, such as Binance Coin (BNB), if you’re using the Binance exchange. CoinJoin is another tool that can offer such a service. Once converted, this dust can be used for trading activities within the platform.

How to Prevent a Crypto Dusting Attack

Preventing crypto dusting attacks requires taking proactive measures to safeguard your cryptocurrency wallet and personal information. Here are several ways to protect yourself from this attack:

Avoid Interaction With Suspicious Addresses

By refraining from transacting with unknown or suspicious addresses, you reduce the chances of receiving crypto dust in the first place. You enhance your privacy and security by transacting only with trusted and known addresses. This reduces the chances of inadvertently revealing sensitive information or exposing your wallet to potential vulnerabilities associated with interacting with unknown or suspicious parties.

Using Blockchain Analytics Tools

Blockchain analytics tools help prevent crypto dusting attacks in several ways. Most of them can identify patterns and associations between different addresses. They can help determine if multiple addresses are controlled by the same entity, providing insights into potential dusting attacks or other malicious activities. By detecting address clustering, you can be more cautious and avoid interacting with suspicious addresses.

It was earlier discussed that crypto dust comes in multiple transactions sent at similar intervals. For this reason, some blockchain analytics tools allow users to set up custom alerts for specific activities or transactions. You can configure alerts to notify you if your wallet receives small, unrelated amounts of cryptocurrency, which are common indicators of dusting attacks. Prompt alerts enable you to take immediate action to prevent further harm.

Use a Safe Crypto Wallet

The safety of users’ funds and privacy lies heavily in the safety of the crypto wallet. Safe crypto wallets often incorporate robust security measures like encryption, strong password requirements, and multi-factor authentication (MFA). These measures help protect the wallet from unauthorized access and ensure that only the wallet owner can initiate transactions.

Some advanced crypto wallets offer privacy features like coin control, stealth addresses, or built-in mixing services. These features enhance privacy by obfuscating transaction histories and preventing traceability, making it more challenging for attackers to link transactions or perform targeted dusting attacks.

Conclusion

This article discussed the answer to the question: “What is a crypto dusting attack?” It has also shown that the deployment of crypto dust in itself is not bad. What matters is the person or entity and the motive behind the dust.

More importantly, the article has explained several steps on how to prevent a crypto dusting attack. Following through on these measures safeguards one from potentially falling victim to a crypto dusting attack.