P2P ‘Ponzi Scheme’ Exchange, Good Crypto, Is Behind the $5M Transaction Fees on Ethereum
Fees paid to miners of the Ethereum network has been gaining a lot of traction lately. In 2020, it has been on an upward trend.
The total fee volume in Ether on the network increased by a whopping 336% in the past two months as mean fee volume surged from 0.00067 ETH on April 17th to 0.0027 ETH on June 15th, a spike of 300%.
However, the highlight of this fee trend was when a single transaction spent $2.5 million in fees to transfer 0.55 ETH on June 10th — the highest value ever.
The next day, a second incident was reported of another Ethereum transaction with enormous fees. This transaction was also broadcast by the same addresses and had an identical fee of 10,668 ETH.
While the first transaction was mined by SparkPool, the second one was mined by Ethermine.
Fees is Already Distributed
Ethermine has already distributed the transaction fee to the miners of its pool, after no contact from the sender for four days. The distribution was reportedly based on a miner hashrate snapshot taken at the time block 10241999.
They further clarified that in the future they will no longer interfere in the payout of large fees and will always distribute the full block reward.
Sparkpool made the same decisions and distributed the proceeds today to the miners that submitted hash to SparkPool on that day.
Today, Ethermine also announced that to prevent transactions with very high fees, the Geth team has introduced a new safety feature that will block sending txs with a fee of more than 1 ETH. This will only affect txs sent via RPC while “txs received via p2p are relayed normally.”
But who exactly was behind these massive fees?
Today, PeckShield, a blockchain security company updated that it was a small South Korean peer-to-peer cryptocurrency exchange called Good Cycle, which “appears to be a Ponzi Scheme project.”
PeckShield said the exchange is also lacking in security — the Good Cycle website uses HTTP protocol instead of HTTPS.
The exchange has also suffered “repeated” hacks. Last week, Ethereum co-founder Vitalik Buterin had shared his theory of a hacker being behind this million-dollar tx fees which may actually be blackmail. He said,
“The theory: hackers captured partial access to exchange key; they can't withdraw but can send no-effect txs with any gasprice. So they threaten to “burn” all funds via txfees unless compensated.”
But this theory was refuted by ZenGo, a keyless crypto wallet provider which said if it would have been blackmail, the service would “defensively halt all operations immediately when they received the ransom demand” but it continued.