An alleged Ponzi scheme was behind the latest $5 million ETH gas fees transactions from the Korean exchange GoodCycle. In our latest Ethereum news, we find out more below.
After a week of looking into details of the transactions, it seems that an alleged Ponzi scheme is behind at least two of the high fee transactions on Ether. According to reports by the Chinese blockchain analytics company Peckshield on June 16th, the originating address seems to be coming from the Korean platform GoodCycle which was recently launched as a peer to peer exchange with huge investment opportunities.
According to Peckshield, the platform shows signs of a major Ponzi Scheme which would only explain the increase in popularity. The analysts conducted a blockchain analysis and found that a wallet with the address starting with “0xcdd6a2b” was the origin of the first two transactions. The team then was able to make a deposit on the platform and prove that the transaction was made to that address. The analysts argued that because of the platform’s relying on a pyramid scheme, it makes sense why it has not come to the public to claim the money because by doing that it would erode the trust in the platform from the users and will eventually collapse.
The co-founder of PeckShield, Jeff Liu, explained that GoodCycle is a victim of an attack but adding that “there are still other possibilities such as an internal operation error.” The Peckshield report noted that the exchange didn’t even use the encrypted HTTPS protocol which could make it trivial to hack the platform via the “man-in-the-middle” type of attack. It seems that the platform is suffering a hack according to the communication and it even blocked withdrawals saying it is performing a “security upgrade.”
The two major transactions sent today to SparkPool and Ethermine from the wallet were identified as the GoodCycle’s ones signed with a message “I am the sender.” It seems that the team regained control as it is unlikely that the hackers will be able to make the transaction. When asked why the exchange didn’t move to shut itself down, Liu replied:
“In my opinion, they are not very experienced exchange operators, and may need some professional help on how to deal with these operation issues.”
However, Ethermine decided to distribute the funds from the gas fees to the miners while SparkPool pledged to start the process as well. Researcher Frank Topbottom was also able to identify that a few addresses connected to the PlusToken Ponzi Scheme were interacting with the address and were also associated with GoodCycle.
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