Analysts from investment bank Citi have warned of a significant increase in fraudulent activity within the Ethereum network. According to their observations, the record surge in the number of transactions and active addresses is not due to an organic increase in users, but rather a wave of fraudulent campaigns, particularly the so-called ‘address poisoning’.
This is reported by Finway
Increase in Fake Transactions and Fraud Mechanisms
In their report, Citi notes that most new transactions in Ethereum have a value of less than $1. This pattern, analysts believe, is typical of schemes aimed at deceiving users.
The essence of ‘address poisoning’ is that fraudsters send small amounts of cryptocurrency from addresses that visually resemble those frequently used by potential victims. The calculation is that in the future, the wallet owner will mistakenly copy the counterfeit address from their history and transfer a significant amount to it.
Low fees in the Ethereum network allow fraudsters to create mass transactions with minimal costs, artificially inflating key on-chain activity metrics without any real increase in demand.
“According to their estimates, the record jump in the number of transactions and active addresses in the network is not due to organic growth in users, but rather massive campaigns of so-called address poisoning.”
Lack of Price Reaction and Contrast with Bitcoin
Despite the record on-chain activity, the price of Ethereum has remained virtually unchanged since the beginning of the year — at the time of preparing this material, it was $2927. This dynamic contradicts assumptions about healthy growth in the network and indicates the artificial nature of the increased activity.
The ETH/USDT chart on the Binance exchange also shows no significant changes, confirming analysts’ conclusions about the lack of organic demand for the asset.
Furthermore, Citi experts emphasize that the situation in Ethereum is significantly different from Bitcoin, where on-chain activity is gradually decreasing without sharp spikes.
Analysts estimate that this difference is evidence that the current surge in activity in Ethereum is a ‘network phenomenon’ caused by fraudulent behavior, rather than a sign of overall growth in the cryptocurrency market.
Previously, the average number of transactions in the Ethereum network reached a new historical high.