Ethereum’s Pectra Upgrade leaves massive loophole for scammers

Ethereum’s gold run, post its much anticipated Pectra upgrade and trillion dollar security initiative, has hit an abrupt halt, after security experts pointed out that its newly introduced ‘EIP-7702’ feature is being exploited by scammers with more than 80% usage linked to a single malicious script.

According to researchers at Wintermute, a leading market maker, exploiters have targeted several unsuspicious crypto wallets with “automated sweeper” attacks using “delegate contracts”– a new feature launched as Ethereum Improvement Proposal (EIP 7702), that forms a part of Pectra upgrade introduced in Ethereum on May 7 this year.

In a series of tweets made on their official X handle, Wintermute confirmed, “our research team found that over 80% of all EIP-7702 delegations were authorized to multiple contracts using the same exact code. These are sweepers, used to automatically drain incoming ETH from compromised addresses.”

The malicious attempts to drain Eth from wallets continue even as the Ethereum Foundation announced a one trillion dollar security program on May 14, that included introducing enhanced security features for its wallets.

How did scammers exploit Ethereum’s Pectra Upgrade?

According to security experts, over 80%of the delegations were authorized for multiple contracts by copy-pasting the same source code emerging from the malicious wallet address. The security glitch allowed exploiters to drain suspecting wallets of their Eth, emerging from the same suspicious wallet address named as “crime enjoyor” by Wintermute researchers.

The security glitch in Ethereum’s recent pectra upgrade had set the conversation rolling on social media as many questioned whether the upgrade enabled scammers.

Understand Ethereum’s EIP 7702 Pectra Upgrade Here

EIP 7702 has been introduced as part of Pectra hard fork in the Ethereum blockchain ecosystem. The novel feature allows externally owned accounts (EOA) to mimic smart contract-like behaviour by delegating its execution to the smart contract.

The feature helps users to mimic smart contracts without having the need to migrate to new wallet addresses and ensuring that the EOA remains controlled by the private key of users. EIP 7702 has been touted as a vision shared by Ethereum’s founder Vitalik Buterin.