Approval Phishing Scams Surge 253% as AI Aids Crypto Theft

Scammers drained at least $14 billion from crypto users through approval phishing and other on-chain scams in 2025, Chainalysis reported. The blockchain analytics firm said the total could reach $17 billion as more addresses are linked to illicit activity. Average losses per victim jumped 253% compared to the prior year, while operations enhanced by artificial intelligence proved 4.5 times more lucrative.

Approval phishing works by tricking a user into signing a smart-contract approval transaction. Once that approval is granted, the attacker can spend the victim's tokens at any time – immediately or after waiting for more deposits. Chainalysis described the social engineering behind it as elaborate. Fraudsters pose as financial mentors or romantic partners, building trust over weeks. They coach victims to move assets off regulated exchanges into self-custodied wallets, then pressure them into approving a routine-looking action like a trade or a small transfer. The approval gives the scammer unlimited access to the wallet's tokens.

Blockchain transactions cannot be reversed, Chainalysis noted, which makes prevention the only line of defense. The firm said tracking these schemes is feasible because criminals reuse infrastructure. The same consolidation wallets, spender contracts, and exit addresses appear across multiple victims, enabling automated detection.