Scam on Blockchain-powered Prediction Site, Reported by Reddit Users

By Chris Torres | March 21, 2019
Scam on Blockchain-powered Prediction Site, Reported by Reddit Users

On March 20th, Reddit users have recently called out a scammer who intentionally created invalid markets to fool people on the Blockchain-based prediction market website Angur.

Angur – an Ethereum-based decentralized oracle and prediction market protocol, founded by the Forecast Foundation – lets people bet on certain predicted event outcomes through staked tokens.

The scam was carried out firstly with a new badly-written prediction market that includes a few complicated inconsistencies. This will cause the Angur system to classify it as invalid, thus the staked money will fall into the scammers’ pocket equally.

At the same time, the market creator will place bets on prediction results that are impossible to happen, after having secured a safe way out to get refunded when the staked money is redistributed.

In the post on Reddit, the user has shared a purposefully fouled market instance dubbed “Ethereum price at the end of March 2019?”. Although the title and the followed information showed the market expiration date “end of day March 31, 2019, UTC,”, there is a few hours difference with the real listed expiration date, which is 1:59 p.m. UTC on March 31. This lack of compatibility between the 2 dates will cause the Angur system to deem the market invalid, while the complicated inconsistency is hard to be detected by betters.

“Augur users shocked, shocked to discover that statements in words may have exploitable ambiguities when computerized and that this opens their system to SCAMMERS!” tweeted by David Gerard, the author of “Attack of the 50 Foot Blockchain”.

Joey Krug — the Forecast Foundation co-founder and core developer at Augur – has tweeted that the scam is not actually as big as how the community has portrayed it. He claimed that it was not a system-wide scam and only happened to one user.

“The system in Augur has a built-in way to combat this: a validity bond. The more markets are invalid the higher the bond goes, augur targets 1% of markets as invalid. Right now it’s 10%. Why? There’s a bug on the chain in the calculation of this bond which makes it too low.” Krug, however, pointed out that the security system used to detect and neutralize such exploitative activity is, in fact, experiencing technical flaws.

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