It's possible I misunderstood how BTCRelay works, but relayers submit block headers to verify from Ethereum that transactions took place in Bitcoin. What prevents relayers from committing fraud by submitting false information as the block headers?
After enough blocks, with enough relayers independently submitting information, the system could find the inconsistency, but what prevents or discourages someone from submitting false information in the first place?
The block are verified by the BTCRelay contract, they should follow the consensus rules of the bitcoin blockchain: valid the proof of work, expected difficulty, etc.
To create fake blocks you need an important computing capacity because you need to fake the proof of work, and in that circumstance it should be more beneficial to mine bitcoin directly.
Also relayers can set a fee with storeBlockWithFee for the block they are submitting. This fee is paid by those who want to verify a transaction in that block.
