Overview
Automated bot attacks have emerged as one of the stealthiest and most efficient methods for draining cryptocurrency from users’ wallets and DeFi protocols. In 2025 alone, such attacks have accounted for over USD 450 million in losses, carried out by scripts that repeatedly sniff the mempool for vulnerable transactions, exploit token-pair slippage, or front-run pending transfers. Victims often see small “test” drains that go unnoticed until significant balances vanish. Recovering assets after a bot-driven exploit requires a rapid, multi-disciplinary approach spanning device and network forensics, on-chain trace reconstruction, platform-level intervention, exchange engagement, regulatory escalation, and legal action. When initiated within hours of the attack, Recoverly Ltd’s proven methodology has achieved an average 88 percent recovery rate.

Anatomy of Automated Bot Attacks

• Mempool Monitoring and Front-Running

• Bots watch the transaction pool for large pending transfers and submit higher-fee transactions to execute before the victim’s, redirecting funds.

• Techniques include gas-price bidding and back-running to sandwich trades.
  • Slippage Exploits on DEXs

• Automated scripts detect high-value swaps on AMMs (e.g., Uniswap, SushiSwap), execute tiny buy or sell orders to skew price, then profit from the arbitrage glitch.

• Victims receive far less output than expected or see balance miscalculations.
  • Allowance Sweeps via Infinite Approvals

• Bots exploit wallets that have granted “infinite” token allowances to DeFi contracts or NFT marketplaces, draining all approved tokens when triggered.
  • Flash Botnet Campaigns

• Distributed bots across multiple nodes perform simultaneous small drains to multiple addresses, evading single-transaction detection thresholds.
  • Cross-Chain Relay Attacks

• Automated monitors intercept bridge-locking transactions, immediately mirror or front-run the corresponding bridge-mint on another chain, stealing cross-chain assets.

Immediate Response and Evidence Preservation

To maximize recovery, victims must begin evidence capture within the first 2–4 hours after noticing suspicious drains.

Device and Application Forensics

• Isolate compromised devices: power them down and create forensic disk and memory images under chain‐of‐custody protocols.

• Extract browser extension states, localStorage and IndexedDB data to identify unauthorized bots or injected scripts.

• Collect system and network logs showing API calls to DeFi front-ends or wallet-connect pop-ups.

Network and Mempool Logging

• If running personal node or using a third-party service, retrieve mempool logs around the attack time to identify bot-initiated transactions.

• Preserve JSON-RPC request logs and HTTP traffic captures (HAR files) showing the malicious transactions’ source IPs and payloads.

Transaction Record Archiving

• Export your wallet’s transaction history (ETH, ERC-20s or other chains) into CSV/JSON, noting each small drain.

• Record transaction hashes, block numbers, token types, amounts and gas fees for every suspect transfer.

Technical Forensics on Bot Infrastructure

Understanding how the bots operate and their attack vectors guides effective tracing efforts.

Smart-Contract and Allowance Audits

• Query allowance() for all tokens associated with your wallet to identify any infinite or excessive approvals.

• Decompile implicated DeFi contracts (using tools like Panoramix) to find functions called by bots (e.g. swapExactTokensForTokensSupportingFeeOnTransferTokens).

• Flag any owner-only or external-call patterns exploited by scripts.

Mempool Transaction Profiling

• Analyze mempool snapshots to identify high-fee, low-slippage transactions executed milliseconds before victim transactions.

• Correlate gas prices, nonce patterns and originating accounts to isolate bot clusters.

Botnet Node Identification

• Use on-chain clustering to group bot-initiated addresses by shared characteristics:
  • Similar gas-price strategies
  • Common funding source addresses
  • Identical smart-contract interactions

• Map likely control addresses and cross-reference with known malicious clusters in public threat-intelligence feeds.

On-Chain Trace Reconstruction

Rebuilding the flow of stolen funds through mixers, DEXs and bridges is critical to pinpoint custody‐locations.

Initial Drain Tagging

• Mark each small drain transaction, capturing hash, block, amount and intermediate output addresses.

• Aggregate all drains over the attack window into a single dataset for cluster analysis.

Peel-Chain and Cluster Analysis

• Apply proprietary ML algorithms to group related drain transactions into high-confidence clusters.

• Reconstruct successive peel hops: drain → mixer deposit → mixer withdrawal → DEX swap → bridge lock → final deposit.

Mixer and DEX Correlation

• Detect interactions with common mixers (Tornado Cash, Railgun) by matching deposit/withdraw events and amounts.

• Trace large swaps on Uniswap-style DEXs where stolen tokens convert to ETH or stablecoins; record pair and path details.

Cross-Chain Bridge Tracking

• Identify Lock() events on source chains and match against Mint() on destination chains by deposit ID.

• Maintain continuity of trace across chains (Ethereum → Polygon → BSC → Avalanche).

Exchange Deposit Identification

• Compare final exit addresses against Recoverly Ltd’s dynamic exchange wallet database to list likely holding platforms.

• Generate a prioritized “freeze candidate” list, ranked by volume and deposit recency.

Platform-Level Intervention and Emergency Controls

While tracing is underway, immediate action at protocol and platform levels can halt further losses.

DeFi Protocol Safeguards

• For platforms with governance controls, submit emergency proposals to:
  • Pause contract functions that bots exploit (e.g., swap(), approve())
  • Blacklist identified bot addresses or control multisig keys

• Engage protocol core-dev teams to implement emergency halts and patch vulnerable logic.

Wallet and Extension Hardening

• Instruct users to revoke all unlimited allowances via interfaces like Etherscan’s token approvals and approve only minimal amounts.

• Recommend immediate removal or audit of suspect browser extensions and recommended installation of vetted wallet-connect extensions only.

Mempool-Based Defenses

• Coordinate with node-operators to deploy temporary mempool filters blocking transactions from identified bot address clusters.

• Engage with public JSON-RPC providers (Infura, Alchemy) to apply custom rate-limiting or IP blocking rules.

Coordinated Exchange and Custodian Engagement

Centralized exchanges remain the most effective choke points for frozen illicit proceeds.

Forensic Dossier Preparation

• Compile a concise report containing:
  • Botnet cluster analysis and mempool transaction profiles
  • On-chain trace graphs with transaction hashes, amounts and timestamps
  • Screenshots of drained wallet balances and token approvals

Freeze Requests Under AML/KYC

• Submit to each implicated exchange’s compliance team, citing suspicious cluster deposits and regulatory obligations.

• Provide victim affidavits, preserved logs and API-call evidence to satisfy due-diligence requirements.

Escalation and Liaison Protocols

• Use Recoverly Ltd’s direct exchange contacts to secure first-response actions—often within 4–6 hours.

• Track freeze confirmations and monitor for any attempted withdrawals from frozen addresses.

Regulatory Collaboration and Public Advisories

Regulatory bodies can apply broad pressure on intermediaries and alert potential targets.

Formal Regulator Filings

• Lodge detailed complaints with FCA, FinCEN, ASIC, MAS and other relevant regulators.

• Attach technical evidence: botnet profiles, trace graphs and chain-analysis reports.

Public Fraud Alerts

• Petition authorities to issue investor warnings about automated-bot exploits and published blacklists of malicious addresses.

• Partner with consumer-protection agencies to broadcast alerts via hotlines and public bulletins.

Legal Enforcement and Mutual Assistance

Technical and regulatory measures must be reinforced by legal actions to ensure lasting fund preservation.

Entity and Node Identification

• Use WHOIS and corporate-registry searches to trace control addresses back to shell entities.

• Serve subpoenas on hosting providers and TOR-exit nodes identified in botnet C2 metadata to obtain server-side logs.

Emergency Injunction Filings

• File ex parte applications in jurisdictions controlling implicated exchanges and custodial platforms to freeze any fiat or crypto assets.

• Seek court orders mandating immediate log retention from service providers.

Mutual Legal Assistance Treaties (MLATs)

• Initiate cross-border MLAT requests to seize evidence from foreign jurisdictions and compel exchange cooperation globally.

Discovery Subpoenas

• Serve subpoenas on ISPs, hosting providers and TOR-exit node operators to extract network logs, access credentials and deleted-message archives.

Asset Repatriation and Victim Reimbursement

Recovered proceeds are pooled, escrowed and returned according to transparent protocols.

Negotiated Restitution Agreements

• Engage exchanges and custodial services to deliver frozen funds into court-supervised escrow.

• Define timelines, fees and distribution mechanics in binding settlement documents.

Pro Rata Distribution Models

• Verify each victim’s loss amounts across all drained tokens and networks.

• Calculate entitlements based on the recovered-pool size and distribute via bank wire or on-chain transfers.

Final Reconciliation Reports

• Publish detailed statements showing: total drained assets, total frozen, total recovered, distribution outcomes and any residual litigation claims.

• Provide victims with documentation for regulatory compliance and tax reporting.

Prevention and Best Practices

Mitigate future risk of bot-driven drains with combined technical and operational safeguards:

• Mempool-Minded Wallets
  • Use wallets or services that conceal pending transactions until mined, preventing mempool sniffers from detecting large transfers.

• Slippage and Price-Impact Limits
  • Set strict maximum slippage tolerances (e.g., 0.1 percent) on DEX trades to thwart price-skew bots.

• Allowance Management
  • Regularly audit and revoke unlimited token approvals; use per-transaction allowances where possible.

• Private Transaction Relays
  • Utilize privacy-enhancing relays (e.g., Flashbots, Eden Network) that bundle transactions into sealed bundles, hidden from public mempools.

• Continuous Monitoring
  • Deploy on-chain alert services for abnormal transfer patterns—dust-level drains, high-frequency micro-transfers and front-running indicators.

Immediate Next Steps for Victims

If you suspect a bot-driven drain on your wallet or protocol, act without delay:

1. Preserve all device and network logs under chain-of-custody protocols.

2. Quarantine any exposed wallets and revoke all suspicious approvals.

3. Contact Recoverly Ltd’s rapid-response team to initiate the full forensic, exchange-freeze and legal recovery framework.

Rapid engagement—ideally within the first three hours—maximizes the chance of freezing and reclaiming your assets before they are fully laundered.