From Ponzi Schemes to ICO Exits, Ethereum's Blockchain Has Been the Platform of Choice for Scammers

According to a recent report from crypto analytics specialists Chainalysis, Ethereum has become the crypto platform of choice for scam artists.

Chainalysis identified over 2,000 scam Ethereum addresses, which have managed to secure funds from nearly 40,000 unique users in the network.

In the space of two years, the modus operandi of scammers seems to have changed, according to data collected by Chainalysis.

2018 then saw the rise of elaborate Ponzi schemes and ICO exit scams, which yielded millions of dollars in income.

The reason for Ethereum's perceived popularity with scam artists is its utility as a platform in which people can start and launch their own native cryptocurrency tokens through ICOs.

As the leading platform to raise crypto funds, scam artists went about hunting for unsuspecting victims using three main methods.

The modus operandi is fairly simple, scammers send potential victims emails or other communications that tricks them into sharing private financial information that gives attackers access to their ETH wallets.

Initial returns are paid out by new investment funds coming in, but eventually the scammers make off with most of the funds, leaving victims empty-handed.

Toward the end of 2018, there were massive spikes in the yield from a couple of Ponzi schemes and ICO exit scams, showing that these projects still pose a big threat in the crypto ecosystem.

This data is backed up by a report from crypto analytics company Ciphertrace, which states that at least $725 million was lost in 2018 to scams including Ponzi schemes, ICO exits and fraudulent ICOs.