Ethereum’s Pectra Upgrade Sparks Security Concerns—’Wallet Drain’ Exploit Looms

Ethereum’s latest upgrade—Pectra—promised scalability, but security researchers warn it’s a backdoor for mass wallet drainage. The network’s forward momentum might come at a brutal cost.

How the exploit works: Lax validation in the new EIPs opens a vector for malicious contracts to siphon funds. No patch yet—just a race against time.

Meanwhile, crypto VCs keep shilling ’paradigm shifts’ while retail bags get lighter. Some things never change.

TLDR

• The Ethereum Pectra upgrade introduced EIP 7702, which allows externally owned accounts to act like smart contracts.
• Over 80 percent of EIP 7702 delegations were linked to a single malicious script draining ETH from wallets.
• Attackers used automated sweeper contracts to exploit the delegation feature and redirect funds from compromised addresses.
• The Ethereum Foundation announced a trillion-dollar security initiative after the upgrade, but could not stop the ongoing attacks.
• Security researchers confirmed that the same malicious code was copied across multiple contracts for mass exploitation.

Ethereum’s Pectra upgrade, which introduced new smart contract capabilities, has opened the door for scammers exploiting the blockchain. The update enabled EIP 7702, a feature now under scrutiny due to widespread abuse by malicious actors. Over 80% of EIP 7702’s use links to a single script, raising critical security concerns.

Ethereum Pectra Upgrade Exploited in Mass Theft

The ethereum Pectra upgrade included EIP 7702 to allow externally owned accounts (EOAs) to act like smart contracts. While it enhanced flexibility and user control, this capability is now being used to automate ETH theft. Attackers utilized “delegate contracts” to mimic legitimate interactions and drain wallet balances swiftly.

Wintermute, a market maker, identified a significant pattern where over 80% of delegations used identical malicious contract code. These contracts performed sweeper functions that redirected incoming ETH to the scammer’s address. The same wallet address linked to these attacks appeared repeatedly, indicating coordinated malicious activity.

While EIP-7702 brings new convenience, it also introduces new risks

Our Research team found that over 97% 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… pic.twitter.com/xHp7zr4hC9

— Wintermute (@wintermute_t) May 30, 2025

The automation of wallet draining through EIP 7702 increased rapidly after the Ethereum Pectra upgrade went live on May 7. The feature enabled easy integration with multiple contracts but lacked adequate safety checks. Attackers abused this loophole by assigning mass permissions through delegated execution, exposing user funds.

Hackers bypass Ethereum’s latest security push

Despite launching a trillion-dollar security initiative on May 14, the Ethereum Foundation could not prevent ongoing attacks following the Pectra upgrade. The program aimed to improve wallet safety and protect user funds. However, the exploiters had already implemented systems that outpaced these safeguards.

0. Announcing the Trillion Dollar Security (1TS) initiative: an ecosystem-wide effort to upgrade Ethereum’s security to help bring the world onchain.

— Ethereum Foundation (@ethereumfndn) May 14, 2025

Security researchers revealed that the malicious code spread by simply copying and pasting the original script across several smart contracts. Each deployment targeted unsuspecting EOAs that had unknowingly granted delegate access to the attacker. The source of the exploit, named “crime enjoyor” by researchers, remains active.

Turns out @RichardHeartWin and Devs were right to NOT be so eager to allow the ETH upgrades for PulseChain.

Ethereum’s Pectra Upgrade Enables Scammers. 

EIP-7702, an account abstraction upgrade, improved the functionality of smart contract wallets. Unfortunately, crypto trading…

— 🇺🇸 VETS IN CRYPTO 🇺🇸 (@vetscrypto) June 2, 2025

Although the Ethereum Pectra upgrade promised innovation, its rapid implementation overlooked critical validation checks. This oversight allowed scammers to operate at scale, putting user assets at immediate risk. The Ethereum Foundation has yet to release a fix for the EIP 7702 loophole.

Smart Contract Behavior in EOAs Becomes a Major Security Threat

EIP 7702’s ability to allow EOAs to delegate functions to contracts created a major shift in Ethereum’s operational model. The intention was to improve wallet functionality without requiring users to migrate to new addresses. However, this flexibility also granted exploiters new pathways for attack.

By leveraging EIP 7702, scammers triggered transactions without alerting users, enabling seamless theft of ETH. Since the smart contract code executed automatically once authorized, wallet owners had little control once compromised. The Ethereum Pectra upgrade, although feature-rich, left gaps in contract verification.

The Ethereum community has started questioning the timing and execution of the Ethereum Pectra upgrade. With real-time exploitation continuing, the upgrade’s impact has gone beyond technical improvements to direct asset loss. Developers are under pressure to release immediate countermeasures for EIP 7702 misuse.