MGC Scam: Contract Clogs Ethereum Network, Spends $1.3 Million on Gas
The address of an Ethereum smart contract linked to a mysterious and apparently scammy project dubbed My Gold Coin (MGC) appears to be clogging the Ethereum network.
Per the ETH Gas Station tracker site, on July 24th the median gas price to execute an Ethereum transaction was 20 gwei — a higher than usual average that indicated Ethereum was experiencing an acute usage spike.
0x174BfA6600Bf90C885c7c01C7031389ed1461Ab9 is at it again, clogging the Ethereum network and forcing gas price to 20 gwei.
This contract, titled “more gold coin” has spent $1,300,000 on gas fees and no one seems to know what it is.
— Eric Conner (@econoar) July 24, 2019
According to the Gitcoin Gas Guzzlers page, the main culprit for the intraday surge of transactions was the MGC token contract, which can be found at 0x174BfA6600Bf90C885c7c01C7031389ed1461Ab9.
Blockchain analytics site Bloxy notes that address was first created in January 2019, having facilitated a whopping eight million transactions since then, many having been airdrops of MGC. The address conducted 330,000 transactions involving MGC on July 24th alone.
That’s a vast amount of activity for an utterly obscure project. As EthHub co-founder Gnosis team member Eric Conner highlighted in the tweet above, the inordinate amount of transfers means the project has already spent a small trove on gas fees with little apparent benefit.
The last time Ethereum gas prices seriously spiked was mid-July, when the MGC contract was in the middle of another sudden spate of activity. The token’s address spent nearly $100,000 USD in gas fees on July 16th. As recently as July 22nd, the standard gas price on Ethereum was as low as 1 gwei per ETH Gas Station, indicating the recent activity hasn’t been constant.
Heads up: anything less than 20 gwei right now is likely to get stuck due to congestion pic.twitter.com/KhY2v3IJcy
— ETHGasStation (@ETHGasStation) July 16, 2019
So what’s clear is the backers of the MGC token are the ones mainly to blame for the current congestion on the Ethereum network. What isn’t clear exactly is what’s going on behind the scenes.
However, from what little information is already available, it appears the token and its flurry of transactions are nefarious and not mundane in nature.
So What’s MGC Token All About?
The More Gold Coin project is seemingly a scam.
There are currently several web entities linked to MGC, including an English language site at mgctoken.io, a Chinese language site at mgctoken.org, and a purportedly “official” Twitter account that features both English and Chinese.
It’s not clear what connection the .io and .org sites have to each other, e.g. if one is ripped off from the next or if they have the same backers. Notably, Ethereum wallet extension MetaMask flags the .org site and another associated .biz site as being on a domain warning list for phishing scams.
“MGC Token creates a decentralized digital asset wallet with unique technological innovation,” the English landing page explains. That may read as empty hoopla, but not as figuratively empty as the Chinese page’s supposed team members, which all appear to be outright fake identities.
Strange videos of these purported team members reading monotonously from MGC-centric scripts have been published on YouTube since the spring. One such video had less than 10 views at press time.
Some have already directly called out the project.
“It is an airdrop advertisement of a scam wallet that asks you to enter a private key to claim your reward,” TokenMarket chief technical officer Mikko Ohtamaa asserted on July 17th in a tweet that was tagged in Eric Conner’s aforementioned Wednesday thread.
In a separate thread from last week, web developer Harry Denley tested the MGC application package, noting “we can confirm they were sending inputted mnemonics to their backend (which is a big no-no).”
However, we can try to recover with a mnemonic since the register process is broken… we can confirm they were sending inputted mnemonics to their backend (which is a big no-no) https://t.co/QOHO1I6FX2
— harrydenley.eth ◊ (@sniko_) June 17, 2019
Using that technique, the project is alleged to have already stolen more than 33,000 ether.
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