In mid-September, one of the largest blockchain transitions in the history of cryptocurrencies took place; the merge. Ethereum (ETH) made the transition from a proof of work (PoW) system to a proof of stake (PoS) system. According to Eric Jardin of Chainalysis, a platform that monitors cybercrime, among other things, the merge had “all the ingredients a scammer needed to steal a lot of money”.
1/ It’s been 6 weeks since the #Merge took place & our cybercrime researcher lead @EricJardine7 found Merge-related scams took in $1.2M worth of Ether.
In this 🧵we look at this trend and who was impacted. https://t.co/are2pPmoX9
— Chainalysis (@chainalysis) Nov 2, 2022
Ethereum merge was Valhalla for scammers
Jardin believes that $1.2 million was stolen from crypto scammers in connection with the Ethereum merge. More than $900 thousand of this amount was stolen on the day of the merge itself.
“A big change led to uncertainty. A large blockchain underwent this change and there was a lot of publicity surrounding the event. Those are the ingredients that bring people to crypto and where scammer succeed.”
Scammers made very cunning use of the merge. The scammers managed to take advantage of many people’s ignorance about the update. For example, victims were persuaded to transfer large sums of money to supposedly secure their ethereum tokens.
Another interesting point that Jardin made is the fact that many of the victims came from relatively wealthy countries. He thinks this is because the scammers assumed they could make the most money here.
3/ This strategy proved quite successful, as we can see in the chart below. September saw massive spikes in scam revenue on the day of the Merge, the vast majority of which went to Merge scams. pic.twitter.com/boOt65tfTO
— Chainalysis (@chainalysis) Nov 2, 2022
More knowledge prevents crypto scams
Jardin believes that if people learn more about how crypto works, they will be less vulnerable to such practices. They will then recognize a scam attempt more quickly and save themselves a lot of trouble in time. Jardin says the bottom line is to try to avoid “things that seem too good to be true.”
Apart from the high amount of scams, the merge update of Ethereum was a great success. The network is now 99.9% more energy efficient than it was before the update. The next update of Ethereum is already in the pipeline. This is the Shanghai update. This update should significantly improve the transaction volume and transaction speed of Ethereum and is planned around September 2023.