Cryptospace Spotlight 2022 #16 (17 Apr 2022)
US Treasury indicated that North Korea-based APT group is behind Ronin Bridge hack, Ethereum 2.0 upgrade is delayed and NFT of first tweet lost nearly 100% of monetary value!
Technology and Industry
Ethereum’s upgrade from a PoW mechanism to PoS successfully completed the essential Merge testing stage, which was trialed on a shadow fork. However, according to Ethereum core developer Tim Beiko, the network’s much-anticipated shift to proof-of-stake might not come until the fall. [more]
Instead of June, Beiko said that the network's transition to proof-of-stake is more likely to come “in the few months after.”
Uniswap Labs, primary developer of the biggest decentralized exchange for spot-market cryptocurrency trading, is seeking to grow by embedding its capabilities into any website. [more]
An upgrade to the Cosmos blockchain network known as Hub Theta went live. With the upgrade, it would include features such as blockchains to change data on another supported blockchain and the Inter Blockchain Communication (IBC) protocol which allows users to transfer crypto assets between supported blockchains. [more]
Twitter founder Jack Dorsey’s first-ever tweet as an NFT for $2.9 million last year was listed for sale again at $48 million. Highest bid was less than $280. [more]
Binance announces 100 million Euro investment in France. [more]
Mastercard files 15 metaverse and NFT related trademarks. [more]
BlackRock will serve as a strategic partner in Circle after leading the latest round of $400 million funding. [more]
As part of the deal, BlackRock will become "a primary asset manager of USDC cash reserves".
In the latest example of a crypto exchange poaching staff from a financial regulator,
Binance has hired French financial regulator's deputy general counsel Stéphanie Cabossioras from France's Autorité des Marchés Financiers (AMF). [more]
Crypto.com has hired a former Washington regulator and federal prosecutor to oversee its efforts to ensure the fast-growing online cryptocurrency platform isn’t used for crimes such as terrorism financing and fraud. [more]
Amazon CEO, Andy Jassy expressed optimism about the future of cryptocurrencies and NFTs in an interview with CNBC. Jassy said that Amazon will not add cryptocurrencies as a payment method for its retail business in the near future. [more]
Emirates plans to expand the airline’s use of the metaverse and launch NFTs to increase revenue and improve customer service. [more]
Regulatory
Europe - The Parliament of the EU has designated ESMA, the European Securities and Markets Authority, the top cryptocurrency regulator of the region in the latest draft of MiCA, the Markets in Crypto Assets regulation. The European organization would have the task of licensing crypto-related institutions and exchanges, putting national regulators under its authority. [more]
Russia - Russia’s Ministry of Finance has amended its digital currency bill to include cryptocurrency mining provisions. [more]
The pending legislation, named “On Digital Currency,” comes as interest in the Russian government’s use of cryptocurrencies.
United States - Biden to nominate former Ripple advisor Michael Barr as the Fed's bank oversight chief. [more]
China - The China Banking Association, the China Internet Finance Association and the Securities Association of China issued a joint statement warning the public about the “hidden risks” of investing in nonfungible tokens, or NFTs. [more]
A recent International Monetary Fund (IMF) study that surveyed thousands of people in 55 countries. When those countries also have strong capital controls that make it harder to transfer money abroad quietly, there are even more crypto users. [more]
As a result, the alliterative authors of “Crypto, Corruption, and Capital Controls: Cross-Country Correlations” conclude that crypto-assets are likely used to move ill-gotten gains abroad.
That finding, they said, adds to the case for stronger, international regulation of cryptocurrencies — particularly the know your customer (KYC) regulations that require the identification of crypto exchange customers.
Security
13 Apr - Elephant Money lost $11.2 million worth of Binance Coin to attacker. It is the DeFi protocol behind the ELEPHANT token and the TRUNK stablecoin. [more][more-ElephantMoney][more-security-analysis]
The attacker used a price manipulation attack to exploit the platform. It borrowed wrapped Binance Coin through a flash loan and traded it for thousands of ELEPHANT Tokens.
The attacker minted TRUNK stablecoins, raising the price of ELEPHANT tokens, and eventually traded in ELEPHANT and TRUNK tokens for Binance Coin and Binance’s US Dollar stablecoin BUSD.
The attacker can get around $4 million profit in one round of the attack, and repeated this process to steal more funds.
Elephant Money said its BUSD treasury has been tapped to rebuild the ELEPHANT Treasury and that a patch for the vulnerability is being worked on.
The price of ELEPHANT has tanked since the attack, dropping more than 76%, according to Binance.
15 Apr - Rikkei Finance lost ~$1.1 million to attacker. It is the DeFi protocol for lending and borrowing on multi-chain. [more][more-Rikkei][more-security-analysis]
Security analysis suggested a lack of access control to the protocol's "setOracleData" function as the main reason why attackers were able to change the code to a malicious contract.
Through price manipulation, the attacker had stolen USDC, BTCB, DAI, USDT, BUSD, and BNB from Rikkei. The attacker swapped all of those tokens to BNB (2671) and then used Tornado Cash to transfer those BNB out of the wallet.
Axie Infinity's Ronin Bridge hack update. US Treasury department alleges that North Korea-based Lazarus Group is behind the $625 million Ronin Bridge hack. [more]
The attacker has since move 21,000 Ethers (~$65M) through Tornado Cash. [more][more-wallet]
Tornado Cash indicated that it was using Chainalysis oracles to block wallet addresses sanctioned by the U.S. Office of Foreign Assets Control (OFAC). [more]
The move comes after the U.S. Department of the Treasury linked North Korean cybercriminal Lazarus Group as an alleged perpetrator for the recent Ronin Bridge hack.
If it sounds good to be true, it probably is (a scam). A security researcher recently shared with KrebsOnSecurity that someone foolishly invested an entire bitcoin at a website, which promised to double any cryptocurrency investment made with the site. [more]
At the crux of these scams are well-orchestrated video productions published on YouTube and Facebook that claim to be a “live event” featuring famous billionaires. In reality, these videos just rehash older footage while peppering viewers with prompts to sign up at a scam investment site — one they claim has been endorsed by the celebrities.
Some of these scams sites are known to be hosted at Cryptohost - a “bulletproof hosting provider for all your projects,” i.e., it can be relied upon to ignore abuse complaints about its customers. It also does not keep logs and uses DDoS protection and mitigation services.
What makes these double-your-crypto sites successful is not just ignorance and avarice, but the idea held by many novice investors that cryptocurrencies are somehow magical money-minting machines, or perhaps virtual slot machines that will eventually pay off if one simply deposits enough coinage.
Coffee-chat
Crypto friendly or not?
Bloomberg - Singapore leaves Industry guessing what ‘crypto friendly’ means. [more]
The pace of PSA licensing approvals has been much slower than expected. Only a small handful of the applicants have actually gotten in-principle approvals or the license. A rule limiting crypto advertising caught the industry off guard, with many thinking it was heavy-handed.
Then this month, Singapore passed a law that will require virtual asset service providers in the city-state which only do business overseas to be licensed, in another step to tighten things up.
Exacerbating Singapore’s situation is that Dubai is making an aggressive play for crypto businesses.
That isn’t to say Singapore is crazy to behave cautiously. Crypto is rife with scams and hacks - and the government justifiably worries that ordinary citizens might suffer from investments in the space.
Forkast News - Singapore’s cautiously optimistic approach is paving the way for it to be a global crypto hub and a key player in its crypto industry’s long-term success. At the same time, Singapore is able to ensure that growth is not unfettered and damaging to its image as a major financial center and to the well-being of its population — which is no small feat. [more]
Crypto-curious nations should look to Singapore as a blueprint if they want to leverage crypto’s development with confidence.
This blueprint includes creating a framework that supports innovation in a low-risk environment, announcing clear and consistent policies or guidelines, and providing capital support to the ecosystem.