There are a number of different ways that people can become victims of scams. For example, a crypto-exchange called Thodex in Turkey has 400,000 users, but has ceased operations as of December 31, 2017. The company’s website states that it is temporarily closed due to a sudden increase in the amount of ETH in its accounts. It is alleged that the CEO took away $2 billion from customers and fled the country.
A recent report by Chainalysis, a blockchain-based cryptocurrency analytics firm, found that the number of Ethereum-based scams dropped from the previous year but the value of funds stolen doubled. In addition, the total amount of funds harmed by ETH scams more than doubled from $17 million to $36 million, which translates to just 0.01 percent of the total ETH in circulation. A survey by Chainalysis revealed that over 2,000 Ethereum scam addresses have received funds from over 40,000 unique users.
The vast majority of these scams involve phishing, whereby criminals use emails and other communications to trick potential victims into revealing private information. This gives attackers access to their users’ ETH wallets. Another type of scam involving the Ethereum ecosystem is the Ponzi scheme, which promises abnormally high returns on an initial investment. These scams work by paying out new investment funds while robbing investors of their money. These schemes also typically require investors to have a high level of technical knowledge, as the funds are irreversible. The victims cannot get their money back once a transaction is complete.