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Since the very early days, back when people learned how to create new cryptocurrencies or quickly build infrastructure models like digital asset trading platforms, many scams started to spawn frequently. According to the blockchain surveillance company Chainalysis, over the last two years fraud in the Ethereum ecosystem has run rampant and it’s been the “cryptocurrency of choice for scams for a variety of reasons,” the company’s latest Ethereum report highlights.

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The blockchain monitoring company Chainalysis has been releasing a series of reports concerning the recent “trends in crypto crime.” The firm’s report “Crypto Crime Series: Decoding Ethereum Scams” explains how ethereum (ETH) is the top choice for crypto-related scams throughout the ecosystem. In 2017, there was only $17 million worth of ETH stolen in scams but in 2018 roughly 0.01 percent of ETH was involved in swindles worth $36 million. “The number of scams declined through 2018, although those that remained were bigger, more sophisticated and vastly more lucrative,” the Chainalysis report details.

“From late 2016 through the end of 2018, Chainalysis has identified over 2,000 scam addresses on Ethereum that have received funds from nearly 40,000 unique users — Scam activity increased dramatically in 2018 with nearly 75% of scamming activity taking place that year,” the report explains.

There are four types of prevalent scams taking place within the Ethereum space – outright fraud, the ICO exit scam, a Ponzi product, and phishing attempts. Chainalysis also says the frequency and success rates of concepts like infection scams can change over time.

“Innovative criminals executed more complex Ponzi and ICO exit scams that generated millions of dollars in income — These more sophisticated schemes dominated the second half of the year,” the crime series report summarizes.

Chainalysis is not the only group watching the Ethereum network for scam related incidents. In fact, the website Etherscamdb.info which showcases a plethora of ETH-related scams can be seen by the entire cryptocurrency community. The Etherscam database has recorded 6,378 scams and 924 are currently active. The records show 1,975 scam-related ethereum addresses and out of the 6,378, roughly 5,454 are inactive. What also should be taken into consideration is that this information is only what Etherscam’s database can trace and there are lots of fraudulent acts that go unnoticed.

Etherscam collects data on fake My Ether Wallet (MEW) websites, Punycode lookalike domains, phony exchanges, fraudulent impersonation giveaways, and ICO exit scams. Then there are Ponzi games tied to the Ethereum ecosystem with multi-level pyramid applications like Fomo 3D and Powh 3D. These platforms only make money by bringing new users into the fold and use all kinds of tactics like pay-per-bid methods, and multi-level marketing techniques. Back in March, the founder of Dapp Radar, Skirmantas Januskas gave a great breakdown of the Powh 3D Ponzi game and called it the “biggest pyramid scheme on Ethereum so far.”

Even though there are many scams on the Ethereum network, there are various ways ETH users can protect themselves by not participating in blatant fraud. Veteran cryptocurrency participants will always illuminate the fact that holding your own keys, utilizing cold storage and multi-signature techniques are critical to keeping financial information safe. But there are many other methods that can be used like bookmarking official cryptocurrency websites, double-checking copy and pasted addresses, and not trusting “free giveaways” that will further help keep digital assets secure. As the Chainalysis crime series report details, blockchain criminals are executing petty crypto crimes far less than before, but the scams that still exist are becoming far more sophisticated.

What do you think about the number of scams attracted to the Ethereum network? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Ethereum logo, Pixabay, Brandon Arvanaghi, and Chainalysis.

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The post Data Shows Ethereum is the ‘Cryptocurrency of Choice for Scams’ appeared first on Bitcoin News.

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