Ethereum Transaction Surge Raises Scam Concerns, Citi Says. Source: ラハール, CC BY-SA 4.0, via Wikimedia Commons
Ethereum has recently recorded a sharp, record-breaking increase in daily transactions and active addresses, but analysts at Wall Street investment bank Citi warn that this surge is unlikely to reflect genuine network growth. Instead, they suggest the spike is largely driven by “address poisoning” scam activity, which artificially inflates on-chain metrics without indicating real user adoption.
In a report published Thursday, Citi analysts Alex Saunders and Vinh Vo noted that a closer examination of Ethereum data shows a large share of new transactions are valued at less than $1. This pattern, they argue, is far more consistent with address-poisoning campaigns than with healthy organic demand. In such scams, attackers send tiny amounts of crypto from wallet addresses designed to closely resemble those a victim commonly uses. The goal is to trick users into accidentally sending funds to the wrong address in future transactions.
Ethereum’s currently low transaction fees make it relatively cheap and easy for malicious actors to generate huge volumes of these small transfers. As a result, headline figures such as daily transactions and active addresses can rise dramatically, even though real economic activity on the network has not meaningfully increased.
This trend was recently highlighted by on-chain researcher Andrey Sergeenkov, who found that stablecoins account for roughly 80% of the unusual growth in new Ethereum addresses. By tracking USDT and USDC transfers under $1, Sergeenkov identified senders that distributed small amounts to more than 10,000 unique addresses. Many of these senders were smart contracts capable of funding hundreds of thousands of poisoning addresses in a single transaction, further amplifying the distortion in network data.
Despite the apparent surge in on-chain activity, ether’s price performance has lagged behind bitcoin. ETH has been largely flat this year, while BTC has gained around 2.4% over the same period, maintaining steadier momentum. Citi analysts also pointed out that Bitcoin’s on-chain activity has continued to trend modestly lower, reinforcing the view that Ethereum’s spike is a network-specific issue driven by malicious behavior rather than broad crypto market growth.
JPMorgan has echoed similar skepticism, questioning whether Ethereum’s post-upgrade increase in activity can be sustained amid growing competition from layer-2 solutions and rival blockchains.
