Crypto: Merge Ethereum (ETH) Scammers.

Merge is the operation after moving from Proof of Work (PoW) to proof of stake (PoS) for the Ethereum network. Also called the Union, this operation dates from September 15, 2022. On top of that, there was already no doubt that the merger could impact the cryptocurrency ecosystem. Specifically, the Ethereum blockchain risked losing some investor confidence if it failed. The risk of fraudsters looking to take advantage of the confusion surrounding the Ethereum merger it was expected. Merger-related scams collected $1.2 million worth of Ether just before, during and after the September 15th merger. These scams briefly became the dominant type of scam in the Ethereum ecosystem. Let’s examine this trend in more detail.

The Fusion cheat explained

Most Fusion cheats work in the same way as the classic trust exchange cheat. The scammer asks his victims to send them a certain amount of cryptocurrency in order to get more in return (usually double the victim’s initial payment). In order to gain the victim’s trust, the scammer often poses as a celebrity. In our case, the scammers explained to the victims that they needed to send cryptocurrency to upgrade to the new Ethereum blockchain and receive funds in return.

September saw a massive increase in income from merger day scams, the vast majority of which went to merger scams. In practical terms, merger scams replaced almost all other Ethereum scam activity on the day of the merger. The collection reaches more than $905,000 ETH on September 15, compared to just under $74,000 for all other ETH-related scams. However, this activity disappeared as quickly as it appeared. Indeed, with fraud activity returning to normal levels within days, and merger-related fraud disappeared by the end of September.

Repeats in this type of fraud

First, with major DeFi hacks making headlines recently, it can be easy to forget that fraud is, and will likely remain, the biggest form of cryptocurrency crime. This type of fraud is obviously particularly harmful to cryptocurrency adoption because of the way fraudsters prey on users’ trust. Periods of major change for the blockchain industry, such as the merger, are a boon for fraudsters. Indeed, confusion and lack of knowledge about a particular event can be exploited by certain actors.

Ethereum Merger Day Scam Peak – Source: Chainalysis

First, it’s worth noting that join scams are more likely than others to target users from countries with large GDPs. It is possible that the targets of the Merge scammers are deliberately users in wealthier countries assuming that they would be more likely to invest more in the scam.

Surprisingly, the merger scams had an 83% success rate on September 15, the day of the merger, and a 100% success rate the other few days before and after the merger. The rise in merger-related scams makes it clear that the industry needs to focus on educating users about what certain events like the Merge mean for them, as well as common types of scams to avoid in general.

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Sami AYADI avatar
Sami AYADI

To the angel of the middlemen of the current monetary system, I oppose DeFi, digital assets and the metaverse. Lawyer in Luxembourg, I am interested in cryptocurrency investment funds.

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