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Scammers used Ethereum's switch to proof-of-stake to steal millions of dollars

Hands holding the Ethereum logo

Chainalysis has found that scammers, leveraging Ethereum’s switch from proof-of-work to proof-of-stake, stole $1.2 million worth of Ether around the time of the so-called “Merge”. The analyst said this was possible because people were confused about the Ethereum Merge and got tricked into sending their assets to scammers as a result.

The main form of scam that Ethereum holders encountered were trust trade scams. Ethereum holders were told by scammers that they should send their crypto to the scammers addresses in order to upgrade their Ether to the new Ethereum blockchain. Actually, those who hold Ethereum didn’t have to take any action during the Merge, but this lack of understanding enabled scammers to steal people’s assets.

In one scam that Chainalysis shared, users were promised double their money back when they sent their crypto to the scammer’s address. Scammers typically impersonate famous people, including Ethereum head Vitalik Buterin, to try to lure unsuspecting victims. Tactics to make users rush, plus the lure of big rewards, sometimes leads to people making very poor choices with their assets.

If you were following along, the Merge occurred in mid-September, with even Google joining in on the excitement around the event. Chainalysis reports that September saw a huge rise in scam revenue. On Merge day, scammers collected $905,000 in Merge-related scam activity compared to just $74,000 in non-Merge scams.

The two countries that were hit the hardest by the Merge-related scams were the United States and India. According to Chainalysis, big events such as the Merge are a scammer’s best friend. It said that the crypto industry needs to do more work to educate users on things like the Merge and how to avoid common scams that could be encountered.

Source: Chainalysis

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