One of the most popular decentralized applications (dApp) 333ETH has been flagged as an active scam by MetaMask – a browser extension used to run Ethereum based dApps in your browser. The dApp promises to give investors a guaranteed 3.33% daily return on their initial investment – this daily return is then touted to last forever. It’s believed that this information has caused MetaMask to label the app as spam, as no algo trading or AI trading system can guarantee results.
It very much appears as if 333ETH is using its assets under management (AUM) volume as a marketing tool. So, as a new investor drops cash into the platform, more want to sign up as the total AUM is growing. It’s presumed that in fact the new deposits are used to pay the 3.33% dividends on all other investor’s contributions – essentially making it a giant Ponzi Scheme.
Investors that are already using 333ETH don’t need to worry about their investments suddenly being sucked out in an elaborate exit scam. This is due to the fact that the Ethereum Smart Contracts that govern the app prevent the owners from doing so. The only people that can suck out an investor’s money instantly is the investor. This smart contracting feature means that it’s highly unlikely that the app is a scam, but the apps marketing verbiage is slightly worrying.
SEC Would Likely Weigh In
The US Securities and Exchange Commission (SEC) has a history of shutting down blockchain and crypto related firms that look like – or actually prove to be – scams. Recently, the SEC shut down a crypto hedge fund for willfully violating securities laws. The SEC flagged two sentences on the hedge fund’s website as suspicious and decided to investigate. Upon further inspection, the SEC decided to shut the party down. If the dApp was based in America, there is a good chance the SEC would be looking into it.
Extension Protecting its Users
MetaMask has placed a landing page before the dApp will load that now warns the user that the app is an active scam, but it still offers them the ability to ignore the warning and proceed to the dApp. In a true decentralized nature, MetaMask is simply highlighting the dangers of using a dApp, but is still letting its users interact with the dApp. Recently the MEGA extension was hacked and code was added to steal Monero from web-based crypto wallets, this is an example of what can happen if extensions get into the wrong hands. Perhaps this chaos could be caused by a similar incident!
MetaMask is taking this incident very seriously and it isn’t happy at all with 333ETH. It needs to be careful, as it’s very close to crossing the line away from decentralized gateway to centralized gateway. This boundary crossover would irk many of the extensions users and it could end up being the final warning it ever issues. How MetaMask proceeds from here is critical to its success in the future. Too little action and users will believe the extension doesn’t care about its users, but too much action and people will feel they are in operating in a centralized fashion.