The platform of Ethereum (ETH) has become the go-to platform for scam artists in the crypto industry, according to a recent report by Chainalysis. Chainalysis is a digital currency analytics firm. The research of the firm shows that last year saw more higher-earning, sophisticated scams carried out using Ethereum (ETH).
Funds Stolen Via ETH-Based Scams Doubled in 2018
The amount of fund stolen ether-based scams surged by 100 percent. In 2017, the amount stolen was $17 million. Whereas, in 2018, $36 million was stolen via Ether-based scams. This is equivalent to 0.01% of Ethereum (ETH) in circulation. The analytics firm identified more than 2,000 scam ETH addresses, which have been able to receive funds from about 40,000 different users in the network.
According to data collected by Chainalysis, the modus of operandi of scammers seems to have changed in the space of two years. Initial Coin Offerings, Ponzi schemes, and phishing exists are still most prevalent, however, there has been a shift in the trend.
Back in 2017, phishing scams were all the rage; this resulted in an increase in this kind of crime. Users began to understand the ever-increasing number of these attacks, this resulted in a decrease in phishing scams. As a result of this, the average amount sent to scam addresses were about half of the amount in 2017.
This led to the emergence of Initial Coin Offerings and Ponzi schemes scams in 2018, and this yielded millions of dollars in income. The reason for the perceived popularity of Ethereum with scam artist is that people can use the platform to create and deploy their own digital currency tokens via Initial Coin Offerings.
Ethereum Attracted More Scam Artist Because It Was the Leading Platform to Raise Crypto Funds
It must be noted that Ethereum doesn’t characteristically provide the right tools or platforms for scammers to run their various scam schemes. The truth is that Ethereum, as a platform, is the number one choice for entrepreneurs that are looking to launch blockchain-based, decentralized projects.
According to data provided by Chainalysis, 82% of all the Initial Coin Offerings in the crypto market are created on the blockchain of Ethereum. Since it was the number one platform to raise digital currency funds, scammers went about hunting for victims using three major methods – phishing, ICOs, and Ponzi schemes.
Over the past couple of years, phishing is known to be the most popular type of scam on the Ethereum platform. It has a fairly simple modus operandi. Scam artists send potential victims emails or communicate with them via other links and trick them into sharing confidential financial information which they can use to access their Ethereum wallets.
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Ponzi schemes, on the other hand, promises investors very high returns on their investments. New investment funds coming are used to settle initial investors. However, the scam artists eventually make off with the majority of the funds, leaving victims with nothing.
The emergence of Initial Coin Offerings has also become very popular. Scammers set up fake projects and firms with elaborate websites and marketing materials. They raise funds through Initial Coin Offerings. Once the fundraising is complete, they sell off the proceeds and run away with the entire capital, leaving victims empty-handed once again.