Cryptospace Spotlight 2022 #22 (29 May 2022)
Terra got its 2.0 approved but allegations on its Mirror Protocol arise, Vitalik warned about endless growth in crypto, and South Korea ramped up regulation on crypto exchanges!
Technology and Industry
Vitalik Buterin noted that crypto should move away from relying on ‘endless growth’. [more]
The above-stated argument is “not acceptable” because the fiat world is “not attempting to offer anyone returns that go up much faster than the regular economy,” Buterin wrote in a blog post that also touched upon the Terra (LUNA) collapse and so-called algorithmic stablecoins more broadly.
Terra
Airdrop of Terra 2.0 announced after a community vote passed Proposal 1623, a bill calling for a new blockchain. [more]
1.388 billion UST stablecoins to burn after proposal 1747 has passed. This will reduce UST’s supply by roughly 11% of its total supply of 11.28 billion tokens, according to data from CoinMarketCap. [more]
QANplatform, the Quantum-resistant Layer 1 hybrid blockchain platform, today announced its selection into the Global Accelerator, Newchip Accelerator’s May 2022 cohort. [more]
Wormhole bridge, Jump-backed cross-chain connector, expands to Cosmos ecosystem through integration with Injective, an EVM-compatible chain in the Cosmos ecosystem. It becomes Wormhole’s 11th chain. [more]
MetaMask will partner with Asset Reality on a new service that could improve the chances of victims getting their hacked crypto assets back. [more]
Stripe announced that customers will once again be able to convert incoming payments or any balances into Bitcoin four years after suspending the service. [more]
This time, Stripe's Bitcoin transactions will be powered by an app created in partnership with OpenNode. The crypto startup leverages the Lightning Network.
Venture capital firm Andreessen Horowitz has raised $4.5 billion for its fourth cryptocurrency fund, bringing its total raised for crypto and blockchain investments to over $7.6 billion. [more]
JP Morgan Chase has developed a collateral management blockchain solution for traditional finance. Last week it executed its first transaction by tokenizing BlackRock money market fund shares and using them as collateral. This is the latest solution from its Onyx blockchain and digital assets division. [more]
Crypto exchanges
Regulatory
United States -
Three Republican senators have introduced a bill seeking to prohibit app stores from hosting apps that enable transactions in China’s digital yuan. [more]
Bipartisan crypto bill to hit Congress as soon as next week. [more]
The Responsible Financial Innovation Act, which has been in the works for over a year, is going to be the first comprehensive digital assets framework to make it to Capitol Hill.
The Fed found that 13% of Americans using crypto for payments do not have bank accounts, up from the 6% among people who don’t use crypto at all. [more]
South Korea - KBS reported that the People’s Power Party – the second-largest party in parliament and the party of President Yoon Suk-yeol – and the government held a joint “Emergency Inspection Meeting for Virtual Assets” at the National Assembly on May 24. [more]
The meeting concluded with the announcement that the government would look to revise existing crypto regulations – and will likely focus on policing the way that exchanges list and delist coins.
Portugal - Portugal’s parliament this week rejected two bills that would introduce heavy taxes on crypto gains for individuals. [more]
One of the amendments would compel tax authorities to tax capital gains from personal crypto investments beyond 5,000 euros ($5356).
The other would impose a flat rate tax of 28% on all crypto gains, which is the normal capital gains tax in Portugal for residents. The final version of the 2022 budget, which doesn’t include these bills, was approved this Friday in the Portuguese parliament.
Thailand - The Thailand government has decided to exempt crypto transfers from value-added tax (VAT) payments until December 31, 2023, following a royal decree, the Bangkok Post reported. [more]
China - Chinese authorities have fined a hydropower plant in Central China’s Hubei province 43,493 yuan ($6,528) for “illegally supplying electricity to virtual currency mining operations,” as the country continues to crack down on cryptocurrency operations. [more]
Security and Risk
26 May - Accusations of fraud on Terra have surfaced from a person only known by the Twitter handle FatManTerra about Terra’s synthetic assets protocol Mirror. Specifically, an exploit related to Mirror’s lock contract. [more-FatManTerra][more-1][more-2]
The bug in question relates to the Mirror lock contract. Under normal circumstances, users lock their collateral, and after a 14-day holding period, they can use an unlock function to release the collateral.
Until the UST implosion, the code which governed the unlock function did not have a duplicate check. Meaning an attacker could repeatedly release funds after the 14-day lock-in period.
Further investigations show attackers have exploited the bug hundreds of times since October 2021.
A community investigator under the username PF92 said at least 88 million UST was stolen through this vulnerability.
21 May - Immunefi announced that an ethical hacker has earned a record $10 million bug bounty reward after discovering a critical security vulnerability in the Wormhole core bridge contract on Ethereum. [more-1] [more-2]
Wormhole awarded the maximum payout under its Immunefi-hosted bug bounty program to a bug hunter with the online pseudonym ‘satya0x’.
The flaw, described as “an upgradeable proxy implementation self-destruct bug”, was validated and patched on February 24, the same day Satya0x reported the issue.
An attacker could then force an upgrade attempt with submitContractUpgrade(), causing a DELEGATECALL to an attacker-submitted address, which by executing a SELFDESTRUCT opcode could destroy the implementation contract.
Coffee-chat
Crypto investment risk
European Central Bank president and Bitcoin critic Christine Lagarde has admitted she has a son who has invested in cryptocurrencies—but still says she wouldn’t touch digital assets. [more]
“If you want to invest there, it’s your choice,” she stated. But, “I believe that should be regulated…. Those who invest should know. It’s a super risky asset.”
Binance CEO Changpeng Zhao (CZ) recommends diversifying investments even though he's 'all in' crypto. [more]
Taiwanese man commits suicide after losing nearly NT$60 million from Luna crypto crash. [more]