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Ripple: Fake investment scheme accounts for 40% of all XRP Ledger tx

  • The Danish company has uncovered a new fraud system on the XRP Ledger that uses the IOU function on the XRP Ledger to run a fraudulent investment program.
  • Currently, the transactions account for about 40% of the daily successful payments on the XRPL., an information source for insights, analysis and AML data for the XRP Ledger, has shared a new report on fraudulent activity via Twitter. As the analyst writes, an unfair investment program or arbitrage platform is using the IOU function on the XRP Ledger to run a fraud scheme.

IOUs are a function that allows anyone to issue a token. Anyone who relies on it can trade, send and receive the tokens. The big disadvantage of IOUs, from which now also the fraudsters seem to profit, is that the tokens do not offer any protection for token names, except XRP tokens. Anyone can call their token USD, EUR or even BTC token.

Unlike legitimate tokens, however, the user cannot check whether the newly created tokens have a guarantee, i.e. are covered by a real equivalent 1:1, as Xrplorer explained in the series of tweets:

IOUs are great! But there is no governance, so anybody can issue what they want – this also means that a “BTC” IOU is not necessarily backed by BTC.

According to an analysis by Coil dated December 12, 2019, more than 30 million BTC in 116,000 payments had been sent so far, and according to the investigation it is very unlikely that the tokens actually had any value. The key element of the IOU function are “trustlines”, objects shared by two accounts to track the balance, the issuer and the account, thus proving their legitimacy.

Fraudulent Bitcoin arbitrage platform uses the XRP Ledger has now uncovered a fraudulent investment program that is using IOUs to their advantage. Via Twitter, the analyst pointed out sudden large movements of Bitcoin via the XRP Ledger:

Information about the large amounts of “BTC” being sent on the XRPL: Fake investment scheme/arbitrage platforms claim to profit from arbitrage trading Bitcoin across platforms. They provide evidence of their legitimacy by linking to real transactions on real blockchains.

In order to prove their apparent legitimacy, the fraudsters send short messages to users, declaring that their trade is “part of a consolidated Ripple transaction”. A link leads users to a block explorer that displays an XRPL BTC IOU payment between two accounts.xrp ledger


According to investigations, the scammers have used more than 6,300 accounts on the XRP Ledger to send BTC IOUs back and forth to make money. In total, the fraudulent transactions of the arbitrage platform currently account for about 40% of the daily successful payments on the XRPL, with more than 67.5 million transactions sent in total.

As reported by CNF, recently uncovered that several crypto exchanges have fallen victim to a hack because they incorrectly implemented the “Partial Payment” payment method of the XRP ledger. According to the Xrplorer analysis tool, three attacks were successfully fended off on June 3 alone.

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