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Scams in the cryptocurrency world have become common; perhaps too common. There’s not a single year that hasn’t witnessed such scams. According to tracking site EtherscamDB $36 million worth of Ethereum were stolen in scams in the year 2018, double than the $17 million take-ups in the year 2017. Surprisingly (or not), the beginning of the year 2019 has also witnessed the year’s first reported crypto hack where $16 million worth of Ethereum and ERC20 tokens were stolen.
So-called giveaway, Ponzi schemes, ICO exits, Punycode lookalike domains, fake crypto exchanges, and phishing sites are where the most common types of Ethereum scams emerge. These scams are so effective that even Vitalik Buterin, Ethereum co-founder, adds “Not giving away ETH” to his profile on Twitter. Let’s go through some facts and figures to break down the scale of these scams and decode the radically changing landscape of Ethereum.
Over 2,000 Ethereum scams were reported from the year 2016 to 2018 that have fallen into various categories of crypto scams. However, the year 2018 witnessed a dramatical increase in the revenue of scammers and accordingly the number of people scammed. Almost 75% of these scamming activities have taken a place in 2018 alone with $36 million worth of stolen ether and 40,000 scammed users.
Ponzi schemes were the most profitable scams since the dawn of cryptocurrencies. Since then, things have been changing radically. The latest blockchain and crypto advancements have also brought new ways to scam people. Phishing, ICO exits, fake exchange and giveaways were the most common types of scams hunting Ethereum users. In the year 2017, phishing was leading the scamming pack with 88.6%, followed by combinations of other scams at 7.6% and infection scams at 3.8%.
2018 was subjected to a variety of scams. Spoofing crypto exchanges had scammed at least: $502,000 (838 ETH), fake ICOs stands at $4.5 million (7,513 ETH), and Punycode domains cost users $507,000 (845 ETH). Phishing attacks in the year 2018 were reduced by 50% and were much less effective than the previous year. however, the creative mind of cyber criminals implemented and executed more complex and sophisticated Ponzi schemes while taking advantage of a new age of ICOs. Following phishing scams, ICO exits (31.5%) and complex Ponzi schemes (15%) were second and third contenders in the list of the most profitable scams in 2018 followed by a combination of other scams.
These scams are ones that were either reported or traced by Chainalysis. More than thousands of scams could not be traced and remain unconfirmed as they were without any confirmed addresses tied to them – reported by EthereumDB.