Merge is the operation behind the transition from proof of work (PoW) to proof of stake (PoS) for the Ethereum network. Also known as the Merger, this operation dates from September 15, 2022. Until now, there was already no doubt that the merger could have an impact on the cryptocurrency ecosystem. Specifically, the Ethereum blockchain risked losing some investor confidence if it failed. The risk of scammers trying to take advantage of the confusion surrounding the Ethereum merger which was to be expected. Merger scams raised $1.2 million worth of Ether shortly 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 Scam Explained
Most Fusion scams work the same way as the classic trust exchange scam. The fraudster 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). To gain the victim’s trust, the scammer is often a celebrity. In our case, the scammers explained to the victims that they had to send cryptocurrency to upgrade to the new Ethereum blockchain and receive funds in return.
September saw huge spikes in merge day scam revenue, with the vast majority going to merge scams. In practical terms, merger scams eclipsed almost all other Ethereum scam activity on the day of the merger. The collection represents more than $905,000 of ETH on September 15, compared to just under $74,000 for all other ETH related scams. However, this activity spread as quickly as it did. In fact, with scam activity returning to normal levels within days, and merger-related scams almost disappeared by the end of September.
The recurrences in this type of scam
First, with the major DeFi hacks making headlines recently, it can be easy to forget that scamming is and will likely continue to be the biggest form of cryptocurrency crime. It is clear that this type of scam is especially harmful to cryptocurrency adoption because of how scammers destroy the user’s trust. Periods of major change for the blockchain industry such as the merger are an advantage for fraudsters. In fact, certain actors can take advantage of the confusion and lack of information surrounding a particular event.
Firstly, it is worth noting that merger scams are more likely to target users from countries with large GDPs. It is possible that the targets of scammers Merge users intentionally in rich countries assuming that they would be more likely to invest in the scam.
Surprisingly, merger scams had an 83% success rate on September 15, the day of the merger, and a 100% success rate several days before and after the merger. The spike in merger related scams makes it clear that the industry needs to focus on educating users about what certain events like the Merger mean to them, as well as avoiding common types of scams in general.
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As for the angels of intervention in the current monetary system, I oppose DeFi, digital assets and the metaverse. Lawyer in Luxembourg, I am interested in cryptocurrency investment funds.