EOS Ecosystem, a digital wallet app that claims to offer high returns to users who deposit EOS tokens on its platform, has reportedly shut down its software.
The developers of EOS Ecosystem seem to have run away with around $52 million worth of user funds.
On April 20, 2020, EOS Ecosystem investors reported that they were unable to access their accounts through the platform’s app. Chinese crypto and blockchain media outlet ChainNews revealed that most of the user funds appeared to have been removed from the service’s account.
Soon after Block.one (the tech company behind the development of EOS) introduced the open-source, blockchain-powered software EOSIO in 2018, several companies have conducted investment scams involving the blockchain network’s native EOS token.
EOSCUBE, EOSFIN, and EOS Vote were all deployed on the EOS network and they all turned out to be scams.
As previously reported by ChainNews, EOS Ecosystem doesn’t maintain an EOS node, and may have been running a fraudulent pyramid scheme. Last year, the project’s developers were sued in a court based in Tengzhou, China. They’ve been accused of orchestrating a pyramid scheme that involved more than 33 million EOS crypto tokens, which are currently worth over $80 million.
In addition to scams, crypto and blockchain projects have faced many other challenges including damaging hacks or security breaches, and heavy fines due to regulatory issues.
In September 2019, Block.one was fined $24 million by the US Securities and Exchange Commission (SEC) for raising $4.1 billion through an initial coin offering (ICO). The SEC ruled that Block.one had carried out its ICO campaign in a manner that violated established securities laws.