The New Crypto Scams To Look Out For After ‘The Merge’

• After six years of delays, Ethereum’s ‘The Merge’ has finally been completed.
• New trends and system upgrades typically open up new opportunities for scammers, and The Merge is no exception.
• As fraudsters adapt to the new environment, so must crypto investors.

Ethereum’s move to Proof-of-Stake protocols in ‘The Merge’ system upgrade could represent a chance for the coin to become the world’s preeminent coin. Its functionality, energy use, and processing times are set to become more user-friendly and will put the coin in the best position to bring crypto into the mainstream.

The good news for crypto investors is that The Merge could be the tipping point that enables the sector to reach its full potential. The bad news is that the crypto sector, which has always been rife with fraud, now has to close off new security threats associated with the tech upgrade.

‘The Merge’ Risk 1 – Fake ETH2 Tokens

The massive scale of the restructuring of the Ethereum blockchain explains the years of delays which blighted the project. The analogy often used was to compare it to replacing the foundations of a skyscraper whilst it was still standing.

One option open to the managers of the blockchain, and one used by other coins in the past, would have been to develop a new coin, ETH2. That would have enabled the re-org far more freedom.

From day one of the process, the Ethereum foundation made clear that an ETH2 token was not a possibility. However, scammers have already exploited the opportunity to misinform holders of ether and convince them to exchange their existing ETH coins for the new ETH2, which of course, don’t exist. There are no swaps, no upgrades, and no need for holders of ether to take any action regardless of how many times fraudsters suggest they need to.

‘The Merge’ Risk 2 – Airdrop Scams

The move to Proof-of-Stake protocols allows crypto holders to earn a return on their position by ‘staking’ their crypto. This is a new development for ether investors, and there are already reports of scammers taking advantage of coin holders taking time to adapt to the change in approach.

Fake airdrops of new coins could sound plausible enough; after all, The Merge has revolutionised how things are done. Unfortunately, the promise of something for nothing can instead lead to crypto criminals gaining access to investors’ keys and, subsequently, the assets in their accounts.

Airdrop scams have the feel of a ‘phishing’ scam. Investors are warned to avoid clicking on links in unsolicited emails and giving any kind of personal information.

Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you would like to know more about this particular topic or have been scammed by a fraudulent broker, you can also contact us at [email protected]

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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