From Ponzi Schemes to ICO Exits, Ethereum’s Blockchain Has Been the Platform of Choice for Scammers
According to a recent report from crypto analytics specialists Chainalysis, Ethereum (ETH) has become the crypto platform of choice for scam artists.
Its research suggests that 2018 saw far more sophisticated, higher-earning scams carried out using ETH, although the actual number of these crimes dropped significantly year on year.
The amount stolen through ETH-based scams doubled from $17 million in 2017 to $36 million in 2018. This equates to 0.01 percent of ETH in circulation.
Chainalysis identified over 2,000 scam Ethereum addresses, which have managed to secure funds from nearly 40,000 unique users in the network. In the space of two years, the modus operandi of scammers seems to have changed, according to data collected by Chainalysis. Phishing, Ponzi schemes and initial coin offering (ICO) exits are still the most prevalent, but there has been a shifting trend. Phishing scams were all the rage in 2017, which led to a surge in this type of crime.
Users cottoned on to the ever-increasing number of these attacks, which led to a decrease in the efficacy of phishing scams. As a result, the average amount sent to a scam address was nearly half of the amount in 2017. 2018 then saw the rise of elaborate Ponzi schemes and ICO exit scams, which yielded millions of dollars in income.
The reason for Ethereum’s perceived popularity with scam artists is its utility as a platform in which people can start and launch their own native cryptocurrency tokens through ICOs. It is fairly easy for any project to put together a convincing website and business proposal, and raise funds in a decentralized way through the Ethereum blockchain.
As the price of Bitcoin and other cryptocurrencies surged in 2017, investors easily parted ways with their crypto holdings, in the hopes of seeing massive returns on their investments.
Nefarious individuals and groups took advantage of the situation, which has inevitably fleeced many an unsuspecting investor.
Phishing is considered to be the most popular type of ETH scams over the past few years.
The modus operandi is fairly simple, scammers send potential victims emails or other communications that tricks them into sharing private financial information that gives attackers access to their ETH wallets.
Ponzi schemes have become more prevalent. These schemes promise investors abnormally high returns on an initial investment.
Initial returns are paid out by new investment funds coming in, but eventually the scammers make off with most of the funds, leaving victims empty-handed. ICO exits have also become more popular as of late. Criminals set up fake companies or projects with elaborate marketing material and websites. Funds are raised through ICOs but once that is complete, the criminals sell off the proceeds and disappear with all the capital, once again leaving investors with nothing.
Its research suggests that 2018 saw far more sophisticated, higher-earning scams carried out using ETH, although the actual number of these crimes dropped significantly year on year.
The amount stolen through ETH-based scams doubled from $17 million in 2017 to $36 million in 2018. This equates to 0.01 percent of ETH in circulation.
Chainalysis identified over 2,000 scam Ethereum addresses, which have managed to secure funds from nearly 40,000 unique users in the network. In the space of two years, the modus operandi of scammers seems to have changed, according to data collected by Chainalysis. Phishing, Ponzi schemes and initial coin offering (ICO) exits are still the most prevalent, but there has been a shifting trend. Phishing scams were all the rage in 2017, which led to a surge in this type of crime.
Users cottoned on to the ever-increasing number of these attacks, which led to a decrease in the efficacy of phishing scams. As a result, the average amount sent to a scam address was nearly half of the amount in 2017. 2018 then saw the rise of elaborate Ponzi schemes and ICO exit scams, which yielded millions of dollars in income.
The reason for Ethereum’s perceived popularity with scam artists is its utility as a platform in which people can start and launch their own native cryptocurrency tokens through ICOs. It is fairly easy for any project to put together a convincing website and business proposal, and raise funds in a decentralized way through the Ethereum blockchain.
As the price of Bitcoin and other cryptocurrencies surged in 2017, investors easily parted ways with their crypto holdings, in the hopes of seeing massive returns on their investments.
Nefarious individuals and groups took advantage of the situation, which has inevitably fleeced many an unsuspecting investor.
Phishing is considered to be the most popular type of ETH scams over the past few years.
The modus operandi is fairly simple, scammers send potential victims emails or other communications that tricks them into sharing private financial information that gives attackers access to their ETH wallets.
Ponzi schemes have become more prevalent. These schemes promise investors abnormally high returns on an initial investment.
Initial returns are paid out by new investment funds coming in, but eventually the scammers make off with most of the funds, leaving victims empty-handed. ICO exits have also become more popular as of late. Criminals set up fake companies or projects with elaborate marketing material and websites. Funds are raised through ICOs but once that is complete, the criminals sell off the proceeds and disappear with all the capital, once again leaving investors with nothing.
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