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Ethereum Blockchain is the Platform of Choice for Scammers, ICO Exits to Ponzi Schemes

February 06, 2019 13:24
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Ethereum has been voted as the preferred platform for scammers, according to the research report by Chainanalysis. In its report, it has stated that Ethereum continues to be one of the most commonly used blockchain platforms for conducting scams against otherwise unsuspecting patrons.

The amount stolen through ETH-based scams in 2018 amounted to $36 million, which is more than double that of 2017 from $17 million, and this equates to 0.01 per cent of the total ETH circulation.

According to Chainanalysis, over 2000 scam ETH addresses has managed to steal nearly 40,000 unique users in the network, and in two years scammers have significantly changed their modus operandi. The popular ways deployed by scammers are phishing, Ponzi schemes and ICO exits.

Phishing scams were very popular during 2017 but awareness among users led to a decrease in the efficacy of phishing scams. As per Chainanalysis estimates, the amount sent in 2018 to scam was $94, which is nearly $50 less than 2017’s median. The median total revenue made in 2017 was more than $6,500 but has dropped to $2,500 in 2018.

In 2018, more sophisticated type of scams emerged and witnessed the rise of elaborate Ponzi schemes and ICO exits, yielding millions of dollar in income. Scammers deployed complex scams and targetted potential victims that helped them to garner massive money. Chananalysis explains that twice the number of users compared to 2017, lost up to four times as much in 2018 compared to 2017.

Towards the end of 2018 witnessed a massive spike in Ponzi schemes and ICO exit scams, and still, there is a big threat to the crypto ecosystem. According to data from crypto analytics company Ciphertrace, it states that overall around $725 million was lost in 2018 to scams including Ponzi schemes, ICO exits and fraudulent ICOs.

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