Value of Ethereum scams is growing, says cryptocurrency research firm

The amount of revenue Ethereum scammers are accruing from their activities has risen substantially in recent years, a firm of blockchain analysts claims.

According to Chainalysis, there has been a lower number of scams overall in the sector but the revenues from them have gone up significantly.

The firm’s research found that across 2018 there was only around 0.01% of Ethereum which fell victim to thieves. However, in total, this represented $36 million US dollars – which is more than twice the sum of $17 million stolen overall the year before.

Chainalysis claimed that the reason that the overall value managed to rise was because scams were larger in scale and were increasingly “sophisticated”.

“In 2018, only about 0.01% of ether was stolen in scams, worth $36 million, double the $17 million take for 2017”, it said.

“Furthermore, the number of scams declined through 2018, although those that remained were bigger, more sophisticated and vastly more lucrative.”

According to further research by the firm, over the two-year or so period to the end of 2018 there were more than 2,000 fraudulent addresses on the Ethereum network – and a double-figure number of unique traders were found to have transferred cash to them.

“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 firm said.

More broadly, Chainalysis claims that Ethereum “has long been known as the cryptocurrency of choice for scams, for a variety of reasons”.

It is understood that Ethereum scams are changing in nature as well as in terms of scale and prominence.

Firstly, the former scam type of choice – phishing – is believed to have declined in popularity due to too many phishing scammers joining the market.

It is also believed that new forms of scamming, such as initial coin offering (ICO) related scams, are now more popular – and potentially more dangerous given how “innovative” Chainalysis claims to be.

“In 2018, scamming activity shifted in two ways. First, after the success of phishing scams in 2017, many more criminals jumped on the bandwagon. They saturated the market with phishing attacks, but fewer users took the hook”, the firm said.

“In 2018… A smaller group of 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.”

Ethereum is a leading name in the cryptocurrency field and is often described as second only to Bitcoin in terms of its popularity and name recognition.

It was first released in 2015, and during 2017 it experienced a significant rise in value over the course of the year.

The idea first came from a researcher named Vitalik Buterin.

In some ways, it is considered to be superior to Bitcoin. Its block time, for example, is 12 seconds – compared to ten minutes for Bitcoin.

Chris Lee

Share

Tweet

Safest Forex Brokers 2025

	Broker	Info	Best In	Customer Satisfaction Score
#1	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#2	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#3	* 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#4	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#5	51% of retail CFD accounts lose money Founded: 2007	Global CFD & FX Broker (*Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more)	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#6	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#7	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 51-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.