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Recently, Ethereum (ETH) has seen notable increases in transaction volume and active addresses, yet its price hasn’t responded accordingly, raising questions in the market. Amid this situation, Wall Street’s major bank Citibank issued a warning, suggesting that the rising network activity might be linked not to genuine user growth, but to potential fraudulent activity.
Citibank: Network Activity May Be Related to Fraud
Citibank analysts Alex Saunders and Vinh Vo closely examined Ethereum’s recent activity surge. They noted that the increase in daily transaction volume and active addresses could be largely associated with “address poisoning,” a known fraud tactic. According to the analysts, the spike indicates artificial transaction traffic rather than organic user growth.
The report highlights that many of the recent transactions involve micro-transfers under $1. Citibank suggests these small-value transfers align more with fraud schemes than with new user adoption, emphasizing that Ethereum activity data should be interpreted cautiously.
“A significant portion of Ethereum’s new transactions recently consists of micro-transactions under $1, which appear more consistent with a fraud model than a genuine influx of users.”
Citibank also notes that Ethereum’s low transaction fees make the network attractive for fraudsters, allowing them to conduct large-scale micro-transfers at minimal cost.
What is Address Poisoning?
Address poisoning is a growing scam in the crypto world. Fraudsters:
- Create fake addresses similar to legitimate wallet addresses (matching first and last characters)
- Send tiny amounts to these addresses to appear in transaction histories
- Hope users mistakenly send funds to the fake addresses when copying them
This type of attack poses significant risks, especially for users handling frequent transactions who don’t manually verify addresses.
Assessment
Citibank’s warning shows that rising Ethereum network activity isn’t always a positive signal. When price movements don’t align with transaction growth, investors should be cautious of potential fraud. Ethereum users are advised to carefully verify addresses, review transaction histories, and strengthen security measures during this period.
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