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From Ponzi scheme to ICO's withdrawal from Ethereum, the blockchain has become the preferred platform for fraudsters

Time : 13/11/2021 Author : 7vq1f9 Click : + -
        According to the latest report of encryption analysis expert chainalysis, Ethereum (ETH) has become the preferred encryption platform for fraudsters. Its research shows that in 2018, ETH was used for more complex and higher-income fraud, although the actual number of these crimes decreased significantly year-on-year. The amount stolen through eth based scams doubled from US $17 million in 2017 to US $36 million in 2018, which is equivalent to 0.01% of eth in circulation. Chainalysis has identified more than 2000 fraudulent Ethereum addresses, which have successfully obtained funds from nearly 40000 independent users in the network.
        According to the data collected by chainalysis, the modus operandi of fraudsters seems to have changed in the past two years. Phishing scams were all the rage in 2017, leading to a surge in such crimes. The number of users against these attacks is increasing, which leads to the decrease of the effectiveness of phishing fraud. As a result, the average amount sent to the fraudulent address was almost half of the amount in 2017. In 2018, a well-designed Ponzi scheme and ICO exit scheme followed, with revenues reaching millions of dollars. The reason why Ethereum is recognized by fraudulent artists is that as a platform, people can launch and issue their own local cryptocurrency tokens through ICO.
        Any project can easily build a convincing website and business plan, and raise funds in a decentralized manner through the Ethereum blockchain. With the price of bitcoin and other cryptocurrencies rising sharply in 2017, it is easy for investors to separate their crypto assets in order to obtain large investment returns. First of all, it must be pointed out that Ethereum, as a platform, does not provide a suitable environment or tools for artists to implement various schemes. The simple fact is that Ethereum is the preferred platform for entrepreneurs seeking to launch decentralized blockchain projects. According to the data provided by chainalysis, 82% of all ICOS are created on the Ethereum blockchain.
        In the past few years, phishing has been considered the most popular type of eth fraud. The operation is quite simple. The fraudster sends emails or other communications to potential victims to induce them to share private financial information, so that the attacker can access their eth wallet. Ponzi schemes have become more common. These plans promise investors an exceptionally high return on their initial investment. The initial return was paid through a new investment fund, but the fraudster eventually cancelled it with most of the funds, leaving the victims empty handed. ICO exports have also recently become more popular. Criminals set up false companies or projects through elaborate marketing materials and websites.
        The fund is raised through ICO, but once it is completed, the criminals will sell the proceeds and disappear with all the funds, once again leaving investors with nothing. As explained by chainalysis, phishing fraud was the most popular fraud method in 2017, but users became more cautious in the second year, and the popularity of these scams decreased. In addition, as criminals began to change their attack methods, the medium amount of money stolen from individuals seemed to have declined. In 2018, the average amount sent to scams was $94, nearly $50 lower than the median in 2017. In 2017, the median total revenue exceeded US $6500, but last year's revenue dropped significantly to less than US $2500.
        In 2017, the income of 49 fraud operations was less than $100, and in 2018, the number increased to 181. 65 of these scams earned less than $10, indicating that investors have become more astute in choosing fraudulent businesses. Although the overall success of fraud seems to be decreasing, a few of these activities have succeeded in stealing millions of dollars from unsuspecting investors. This may indicate that criminals must become smarter because they deceive potential victims, and complex scams have already received a large amount of money. To this end, chainalysis pointed out that the number of users in 2018 decreased fourfold compared with 2017.
        By the end of 2018, the yields of several Ponzi schemes and ICO exit schemes had risen sharply, indicating that these projects still pose a great threat to the crypto ecosystem. This data is supported by a report from ciphertrace, a crypto analysis company, which points out that at least US $725 million was lost in 2018 for scams, including Ponzi scheme, ICO exit and fraudulent ICO. Therefore, according to chainalysis, the trend of fraud has changed dramatically in the past 24 months, which seems likely to continue. Criminals may start using crypto applications such as telegram and WhatsApp in 2019 to move from the dark market.
        Cryptocurrency will continue to be a method of money laundering and transfer of funds, which will lead to further regulatory actions by the authorities.
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