The scam was revealed by users of Reddit on March 20th.
In the post, “Augur is being gamed!” the poster “singlefin12222” claims:
“Some people (in) the augur community are currently pulling off this scam:
-Create market with very subtle mistake in the description (like non native english language)
-Scammers bet on the outcomes that will not win
-Scammers stake REP on the market being invalid
-All staked funds will be distributed equally. So scammers that bet on the wrong outcome will profit.”
Users of the Augur platform use a platform-specific cryptocurrency called REP to place bets involving other cryptocurrencies. REP is only used to permit betting and possibly penalize bad actors on the platform.
Augur has been criticized in the past for hosting so-called “assassination markets” where users bet on when a famous individual might die.
These types of prediction markets are largely illegal in the US because authorities believe they could be used to incentivize murder.
But the platform has also hosted relatively innocuous contests.
According to “singlefin12222,” however, the current glitch on the platform, “…makes Augur unusable at this point since basically every single character in the market description can be used to render it invalid. The staking model doesn’t work because the majority of REP holders doesn’t participate.”
Augur co-founder Joey Krug tweeted that the report on Reddit is, “kinda fake news,” and said only one person is cheating the platform this way:
1) Almost all of these purposefully confusing markets are being created by one person, not a bunch of people. The activity on those markets is also by one person / address. https://t.co/9jLIeGqun9
— Joey Krug (@joeykrug) March 20, 2019
Later in the tweet thread, Krug promises that the problem will be fixed in v2 (version 2) of Augur, but he does not state when v2 will come online.
Social media responders also questioned Krug’s claims that the extent of the problem is very limited.
“Singlefin12222” writes, “Its apparently only one person doing this actively but he gets others to join him.”
Twitter user Mike McDonald challenged Krug’s minimizations, claiming that the affected market it “by far the largest” on Augur:
“This is very real. The only reason I would say it is ‘fake news’ is because it isn’t new and has been going on for ages on Augur- it is just this is the first time by far the largest market on Augur is a clear scam…”
“Right now >50% of money being wagered on this 9 figure project is as part of this scam and I think that deserves to be known.”
Krug continued to downplay the significance of “@realPoyoPoyo’s” (alleged responsible individual’s) gaming of the Augur platform:
“…this is only 5% of open interest, and most of it is clearly wash OI (open interest) by the market creator (look at how most of OI is owned by one address)…”
To this McDonald answered:
“Right. I realize
@realPoyoPoyo created this mostly as a scam. That said he created most markets on Augur and is far and away their most active user so it is difficult to really shake it off as a small thing.”