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Activity on the Ethereum network spiked at the end of last week causing transaction fees to hit all-time highs and now fingers are pointing to an obscure Chinese trading platform called FCoin. Accusations are being made against founder Zhang Jian, formerly of Huobi, of orchestrating a series of Sybil attacks in order to drive up traffic, crippling the Ethereum Network and gaining publicity for itself.
FCoin’s Voting Method Blamed for High Ether Transaction Fees
The congestion of the Ethereum Network is linked to F Coin implementing a “cumulative deposit number ranking” voting protocol to list new coins on its exchange. This is a process by which new coins are voted into the exchange based on sending desired coins to the exchange instead of using a simple one vote per user structure.
This voting process is easily manipulated by bad actors creating multiple votes by accessing different accounts to send tokens to the exchange, AKA a Sybil attack. The rush of Ethereum based coins racing to get onto the exchange by using Sybil attacks created substantial congestion on the network which in turn caused transaction and gas fees to increase.
A Reddit poster who goes by the username u/ltcisking wondering how an exchange in its infancy could cause such a drastic slowing of the Ethereum Network and was further puzzled by the exchange’s $7 billion daily trading volume. Looking further the poster concluded that both the exchanges trading volume and the above-mentioned voting process had been heavily manipulated.
FCoin Accused of Botting and Price Manipulation
The poster wrote that after spending just a bit of time on the exchange it was clear that there were “rampant levels of botting being done”. As the Reddit post read “Orders of 5, 7, 10, 15, 20 fly across the screen such that over 6 billion usd in “transactions” can be completed in a 24 hour period on FT (Fcoin Token) alone.”
The user also maintains that the price of the FCoin Token is being constantly manipulated by bots. Again, the poster wrote, “At its current price, it is impossible to acquire enough FT to gain enough daily rewards to offset risk”. u/ltcisking added in his post that he has reached out to unnamed sources at FCoin who have admitted the potential for the exchange to be behind both the botting issues as well as the price manipulation.
The post ends with a call out to anyone who has been involved with FCoin to join a class action suit that u/ltcisking is planning on bringing against the exchange. Commentors expressed their appreciation for the post. Some posted to damn the exchanges practices for putting a whole network at risk for publicity while others called for analytics website Coinmarketcap to vet their position in relation to exchanges more carefully.
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