Ether Scammers Made $36 Million In 2018 -- Double Their 2017 Winnings

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Anyone with stashes of Ether cryptocurrency might
want to watch out for increasingly cunning
scammers, who've found out how to make big
funds with simple swindles.

In 2018, tricksters made $36 million by duping
Ether owners into handing over their money for no
one's profit but the crooks'. That was double the
$17 million for 2017, according to a report from
Chainalysis , which tracks cryptocurrencies for all
manner of government agenices, private entities
and exchanges. (Chainalysis classes scammers as
different to hackers who exploit bugs and outright
steal cryptocurrency, such as those who stole $32
million in Ether in 2017 . Indeed, hackers are
making more than scammers, thanks to repeat
smash and grabs from 2016 through 2019.)

And whilst the number of scams actually started
decling through 2018, they "were bigger, more
sophisticated and vastly more lucrative," according
to the analysis, exclusively provided to Forbes.
Chainalysis found more than 2,000 scam addresses
on Ethereum, the blockchain-based platform on
which Ether (also known by its acronym ETH) is
distributed. Those accounts received funds from
nearly 40,000 unique users over last year. That's
four times more people scammed in 2018 than 2017.

Classic ponzi schemes are working
According to Philip Gradwell, chief economist at
Chainalysis, one of the most significant scams of
2018 was the classic ponzi scheme. This saw
scammers send out emails to Ether owners, asking
them to contribute money for which they'd see a
guaranteed return. Of course, the return was simply
derived from other people contributing to the pot,
not from any genuine investment.

One of the most significant pyramid schemes was
that of 333 ETH, said Gradwell, which made off with
$3.5 million worth of Ether. Running on the
Ethereum-based DApp decentralized application, it
promised a daily 3.33% payout from an initial buy-
in. Though it was called out as a scam , it still
attracted a significant number of Ether owners.
Forbes attempted to find contact details for 333
ETH, but its Russian-language website was down at
the time of publication and there were no contacts
listed in the site's registration details.

The other major scam, which was leading to more
significant losses in the first half of 2018, was the
fake initial coin offering (ICO). Gradwell said this
was down to an ICO "fever" in the early stages of
last year. In some cases, entirely fake ICOs were
created with legitimate-looking websites and
campaigns behind them, encouraging people to buy
up some fancy new currency. The coins then
mysteriously disappeared, as the ICO turned out to
be a fraud.

Finally, standard phishing, where unwitting victims
were duped out of their account passwords. Once
inside Ether wallets, the hackers ransacked the
cryptocurrency within.

An Emerging Android Threat
Whilst it'd be wise for Ether owners to use complex
passwords and be aware of scammers tricks, there's
an emerging threat out there in the form of fake
Android apps.

Lukas Stefanko, a cybersecurity researcher at ESET,
has found a number of fake Ether wallets going
around Google Play. Often they impersonate
MyEtherWallet or MetaMask, trying to rob users of
their login details for the real apps. Each time
Stefanko has warned Google, the apps have been
swiftly removed.

Just earlier this week, the researcher tried out a
mini social experiment, asking his Twitter followers
to pick one of two MyEtherWallet apps that were on
Google's market. A worrying 40% chose the fake.

https://www.forbes.com/