EOS Whales Behind Spam Attack on Ethereum Network, Claims DApp Developer

Francisco Memoria
  • A DApp developer and several ETH users claim EOS is attacking the cryptocurrency's network.
  • This as hundreds of accounts allegedly funded by an address with crowdfunded EOS are creating useless tokens and "wash trading" them.
  • Per Block.one CTO Dan Larimer, the company behind EOS has better things to do than attack the second-biggest cryptocurrency.

The Ethereum network has allegedly been under a spam attack that’s meant to harm its reputation, according to various Reddit users and analysts. Recently, transaction fees surged over 100% as the cryptocurrency’s network was being clogged with transactions.

DApp creator Justo, from the team that launched two gambling games called PoWH3D and Fomo3D, claims 40% of the Ethereum network was being used by a contract that issued an ERC-20 standard token called “IFishYunYu.” The token, per Justo, has no features, and does nothing.

Despite its uselessness, thousands of alleged spam accounts are transferring massive amounts of these tokens for no apparent reason, with some flowing through the controversial FCoin exchange. Per Justo, the exchange is just a ruse, as the real attacker is EOS.

Speaking to TrustNodes, the dApp developer claims thousands of these tokens have been appearing, presumably in an attempt to launch the attack:

Thousands of random tokens, with no website, or bootstrapped template websites made in hours. Wasting hundreds of ethereum daily, hundreds of thousands of dollars to drop tokens. This happened up until the launch of EOS, on the 6th, then immediately stopped.

Justo

What makes the large amount of transactions look like an attack is its unusual effect on transaction fees. When CryptoKitties was clogging the Ethereum network in December, about 1.4 million transactions were being processed a day, and fees were under $1. Now, with over 500,000 being processed, fees are above $2.

Further connecting the attack to EOS is the path some IFishYunYu tokens have taken. It reveals the token’s creator, after issuing 5 billion tokens, split them across 500-600 different accounts and started spamming the network. Blockchain data shows the transactions are being funded by an address that has “a lot of crowdfunded EOS.”

On Reddit, a thread exposing the attack reads:

Gee, that sure is a lot of crowdfunded EOS, hundreds of thousands to be exact. From an account that seems to receive large sums of eos and immediately market sell them for thousands of ETH, which is then distributed out to contracts like this. Contracts that have been pulling this kind of transaction attack consistently across the ETH network.

Reddit

EOS could have a reason to attack the ETH network, as some of its supporters claim it is an “Ethereum killer.” The cryptoasset doesn’t use a Proof-of-Work system, but goes with Delegated-Proof-of-Stake, which allows it to process thousands of transactions per second, but sacrifices decentralization.

Responding to the controversy, EOS architect and Block.one CTO Dan Larimer claimed the company has better things to do than attack the second-biggest cryptocurrency’s network “when all it takes is crypto kitties.”

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EOS is notably no stranger to controversy, as last month its 21 block producers (BPs) were ordered by the EOS Core Arbitration Forum (ECAF) to freeze 27 accounts. In response to the controversy that ensued, Larimer proposed a new constitution that seemingly stripped the ECAF off its powers.

Cashing Out? Nearly 800 Ether Moves out of HEX ICO Wallet to Exchanges

Nearly 800 ether, worth about $98,500, has moved from a wallet associated with the HEX token sale and went to two leading cryptocurrency exchanges: Binance and Bitfinex.

The movements were first spotted by a Reddit user who pointed towards data on the Ethereum blockchain to back up his claims. Etherscan shows that an initial transaction of 500 ETH went to Bitfinex, while other smaller transactions seemingly went to Binance.

The user pointed out that the HEX ICO address still has over 46,000 ETH left in it to be withdrawn by whoever controls the address. The post reads:

There's still over 46,000 eth that can be withdrawn and liquidated by whoever controls this address, but Richard Heart, who created the contract says nobody needs to know who that is.

HEX is a controversial token airdropped on the Ethereum network via a Bitcoin UTXO snapshot. HEX tokens that would go to inactive addresses are distributed to users who contribute ETH to the wallet, which has so far accumulated over $5 million worth of the cryptocurrency.

The project’s founder, Richard Heart, claims investors can get return up to 369% per year depending on the HEX supply being staked. The cryptocurrency community has called out HEX for promising returns for investors, with some critics claiming it simply inflates its supply to reward holders, while those behind the ICO wallet can cash out the Ethereum received selling the token.

The Reddit poster noted, however, the ETH in the wallet may have come from Richard Heart and the team behind HEX, in a bid to make it look like there’s demand for the token. HEX itself is rather illiquid, as it’s only listed on three exchanges and its total trading volume is below $500.

Featured image via Pixabay.