Date: June 11th 2020
Published on: Researches & Statistics
AML, crypto AML, Cryptocurrency, ETH, ethereum, Risk AML, Risk assessment, Risk indicators, RiskAML, Transaction Monitoring,
On June 10, around 1 pm Paris Time, an astonishing transaction occurred: a wallet sent 0.55 ETH with a 10,666 ETH which is 115 euros worth transaction for a transaction fee around €2.3 million at this time (210000 ETH Gas).
Transaction fees are normally set by the network but in some cases, wallet providers or senders can set transaction fees higher so the transaction can be processed more quickly.
Transaction fees around 20,000 times higher than the transaction itself is not something that we can say it’s normal.
Even if identities of sender and receiver are not known (most probably because it’s private individuals), we already know transaction fees should be paid to Sparkpool Mining Pool.
Sparkpool was founded in 2016 and is part of Hangzhou Yuanjing Technology, a China-based entity.
Sparkpool just announced that it has frozen the funds until further notice while welcoming any clue which may help. Was it a coincidence? Was it a finger-slipped accident as such transaction fees are too huge to be unnoticed? Was it a legitimate error handling?
This is not the first time
“Sparkpool has had the experience of handling similar issues properly”, what they said reminds of the similar case last year. Back in 2019, Sparkpool was involved in another case with a large amount of transaction fee. Scorechain published a Tweet to suggest Sparkpool not returning the fee as most of the funds came from mixers.
The story ended with Sparkpool returning half of the mining rewards to the sender. However, could it be an intentional manipulation? Would it be possible that the sender did it on purpose to launder the funds with the complicit mining pool?
High transaction fee set up: a key risk indicator
The set up of abnormal high transaction fees is a common practice for money laundering. Because high transaction fees allow the transaction to proceed very fast and to transfer funds very quickly without AML checks.
Also, let’s take an example: imagine you own 2K tainted ETHs in your wallet and you want to cash out as much as possible, you can simply set up 2K ETHs as the transaction fee. After this very fast kind of operation, you will get back half of your funds, and clean!
That’s why at Scorechain mining pool risk scoring can be lower down by users and can also be considered as a key risk indicator as well.
It happened again today on June 11th
Today another strange transaction like this occurred with the exact same amount of transaction fees. This time it was meant to be mined by Etheremine. Ethermine is an Austria based mining pool and together with ethpool.org, etc.ethermine.org and zcash.flypool.org is part of Bitfly.at.
The investigation could possibly lead to the conclusion that it’s a bug from the wallet/sender transaction fees set up but questions still remain.
We will keep following up closely on this issue. Meanwhile, this kind of abnormal behaviour is worth further investigation before drawing any conclusion.