Cryptospace Spotlight 2022 #21 (22 May 2022)
"Ethereum Merge" might come in August, Regulators are gearing up for stronger oversight and capability in cryptospace and Singapore High Court blocked sale of NFT!
Technology and Industry
Ethereum merge might come in August if everything goes to plan. [more]
The "difficulty bomb" will start slowing down the current Ethereum network.
Ethereum devs are hoping to transition to proof of stake quickly, which would negate the need for an update to delay the bomb.
China returns as 2nd top Bitcoin mining hub despite the crypto ban. [more]
El Salvador hosted central bankers and financial authorities from 44 countries for a financial inclusion event this week. [more]
Participants experienced Bitcoin usage as a part of the event.
Blockchain analytics firm Chainalysis introduced a new tool to help monitor transactions and tokens across DeFi protocols and multiple blockchains. [more]
Morgan Stanley noted that UST’s meltdown is not going to stop the industry in the long run and regulating crypto is inherently difficult given the intersection of technology and finance. [more]
Venture capital firm Andreessen Horowitz (a16z) announced today the launch of $600 million GAMES FUND ONE focused on Metaverse games. [more]
The gaming industry generated more than $300 billion last year.
Regulatory
South Korea -
South Korea’s national tax agency has slapped the Terraform Labs and its co-founder with a $78 million, or 100 billion won, penalty for tax evasion charges. [more]
South Korean Conservative Party has requested a parliamentary hearing on the Luna and UST meltdown event, including to invite both Do Kwon and the exchanges involved to learn more details. [more]
The report issued by the Financial Services Commission (FSC) to the National Assembly calls for new regulations to mitigate insider trading, pump-and-dump schemes and wash trading. The new regulations would be stricter, and the penalties for failure to comply would be harsher than those in the Capital Markets Act that the domestic crypto industry currently abides by. [more]
United States -
Gary Gensler, Chair of the United States Securities and Exchange Commission (SEC) has cited concerns about cryptocurrency enforcement in its budget request for the next fiscal year. [more]
The SEC chair cited concerns about the crypto space, referring to markets as “highly volatile and speculative,” as well as the need for “new tools and expertise” to address enforcement.
U.S. President Joe Biden’s administration will press Congress to demand cryptocurrency exchanges keep their customers’ money separate from their own corporate funds, according to a person familiar with the plan that could constrain the way the industry does business. [more]
United Kingdom -
Department of Treasury, or Her Majesty's Treasury, has reportedly decided to go ahead with legalizing stablecoins as a form of payment. [more]
Financial Conduct Authority (FCA) "will absolutely need to take into account" the recent instability in crypto markets when beginning its work on a new regulatory framework for cryptocurrencies later this year. [more]
Group of Seven (G7) - The financial officials from the G7 have called on the Financial Stability Board to speed up crypto-asset regulation. [more]
The officials from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States met in Koenigswinter, Germany, following a G7 foreign ministers’ meeting earlier last week.
Australia - Australian Tax Office (ATO) renewed calls for Australian investors to correctly report their crypto capital gains or losses. Crypto is one of four main areas the agency is focusing on which also includes record keeping, work related expenses and rental property income. [more][more-capital-gain-tax]
Portual - Portugal’s days as alleged crypto tax haven might soon be over. Portuguese Finance Minister Fernando Medina has confirmed that his government is studying how to tax crypto gains in the country. [more]
Singapore - Singapore High Court blocks potential sale and transfer of rare NFT [more].
The injunction, issued by the Singapore High Court last Friday (May 13), is also said to be the first in Asia - as well as globally for a purely commercial dispute - to protect an NFT.
Security and Risk
16 May - Decentralised exchange FEGtoken’s FEGexPRO contract on both Ethereum and BNB Chain was exploited for about $1.3 million and $1.9 million through two attacks. [more] [more-2] [more-security-analysis][more-security-analysis2]
The attacker managed to attack both the BSC and ETH incidents with due to 'unverified contract' interactions.
The attacker is able to pass in a malicious path address and the token balance in the contract when the Swap-to-Swap functionality is called, allowing the attacker to repeatedly reset the number of tokens recorded by the attack contract in the FEGexPRO contract, thus allowing the FEGexPRO contract to repeatedly approve its tokens to multiple malicious contracts controlled by the attacker.
Almost all the funds have now been withdrawn from the attacker’s wallet to
TornadoCash.
18 May - NFT distributor and marketplace ArtisLife Network’s staking contract was exploited due to lack of validation. [more][more-2]
The contract has a vulnerable tokensReceived() function that does not validate the caller. This allow the attacker to inflate the balance without actually transferring.
The contract calculate the withdrawal with fake deposit. And the attacker managed to drain all the tokens away.
ArtisLife indicated that it will compensate all affected parties. It did not mentioned the loss.
