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Breaking News / Ethereum

Ethereum’s Scam Issues Aren’t Getting Better

Earlier this year in July, products that have been resembling ‘Ponzi Schemes’ have been ‘topping the charts’ amongst decentralised applications (dapps) which are running on the globes second biggest blockchain.

For those of you who don’t know Ponzi schemes are:

“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors.“

https://www.investopedia.com/terms/p/ponzischeme.asp

If the transaction values and user counts on the aforementioned applications are high, then so is the concern of the customers when they face using them. Building up is the warning calls from technologists who aren’t known for their shyness of risks, a group which includes gambling decentralised applications themselves.

For Team JUST, this was just the case. Last week, the anonymous group of developers behind the gambling dapp FOMO 3D, warned that a nearly identical copy of their game was taking a third of the total power of the network which raised more than $7 million of ETH within seven days!

The team went on the record with CoinDesk to publicly allege the game copy as being a Chinese app for the mobile called LastWinner which has allegedly been designed to trick users through displaying fake, bot-driven game activity.

One of the lead designers in Team JUST went onto say:

“The scale of this wallet, the scale of these bots. The amount of sheer gas being used. I genuinely think you’re probably looking at a crime syndicate running in china to scam people on a scale the Ethereum network has never seen before… it’s very bad.”

Developers aren’t the only ones who are worried

Analysts, users and more have had alarm bells ringing on multiple different online channels over the chaos of this transaction activity being caused through this new gambling dapp.

Following the days after the launch, comments on Etherscan proved that this activity was transparent, and users were noting that the app was outperforming even those it was designed to copy.

The blockchain monitoring and analysing firm, Amberdata explained to CoinDesk that the FOMO 3D dapp copy has resulted in the Ethereum blockchain being under heavy fire.

“Overall, about $50.7M of value (incoming £29,000,000 and outgoing: £21,750,000 together) has transmitted through this contract.”

The accusations of scam put forth by Team JUST against the LastWinner dapp have brought up questions which lead back to the intentions of the original game.

However, even Bitcoin has been classed as a Ponzi scheme by critics of the cryptocurrency.


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Robert is a keen investor with a particular interest in cryptocurrencies. He has been involved in the industry for many years, and because of this, has gathered a lot of knowledge surrounding this area. He studied English at university level and has a passion for writing. He loves being able to combine his two mains interests on a daily basis.