A decade after Ethereum’s initial coin offering, which raised $18.5 million in Bitcoin by selling roughly 60 million Ether, debates about whether different forms of manipulation tactics were involved still swirl in social media.
One theory questions whether the Ethereum founders double-spent investors’ funds to artificially inflate the success of the ICO while allowing them to close the sale with a larger share of Ether under their control.
Magazine conducted a joint investigation with Canada-based blockchain forensics experts at Gray Wolf Analytics to determine whether the ICO included double-spending of Bitcoin, an activity deemed fraudulent by the presale’s terms and conditions. The investigation specifically looked for any Bitcoin that entered the presale wallet, was withdrawn and then looped back in.
Three batches of withdrawals took place during the sale. The Ethereum team pulled approximately 3,800 Bitcoin from the ICO deposit address, also known as the exodus wallet, claiming to use them to cover operational costs and loans. Upon examination, some subsequent transactions related to these outflows appeared to create loops in which relatively small quantities of Bitcoin returned to the deposit address.
However, the investigation found that although some transactions initially displayed double-spending characteristics, further analysis determined that the funds in question did not originate from the presale address.
Exodus wallet (36PrZ-gxo2) withdrew roughly 3,800 BTC across three withdrawals during the Ethereum ICO. (Gray Wolf)
“We concluded with a high degree of certainty that this was not the same BTC withdrawn from the exodus address, ” Chedi Mbaga, head of forensics at Gray Wolf, tells Magazine.
However, the investigation found some funds with illicit origins, suggesting that bad actors used the Ethereum ICO to launder dirty Bitcoin for clean Ether.
In 2014, it was quite easy to…
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