Cryptospace Spotlight 2022 #6 (06 Feb 2022)
DeFi Wormhole lost 120,000 ETH to hacker, Nike filed lawsuit over NFT IP infringement, and India moved forward with 30% crypto tax!
Technology & Industry
Matrixport and MetaMask are hoping to onboard the next wave of DeFi institutional investors with a new custodial feature built on multi-chain technology. [more]
Nike filed a lawsuit accusing online sneaker reseller StockX of selling unauthorized images of its shoes in the form of non-fungible tokens (NFT). Another high-profile case involves the French luxury designer brand Hermès, which filed suit against Mason Rothschild after it created NFTs of Hermes' famous Birkin handbags, called “MetaBirkins.”[more]
MIT and Boston Fed concluded first phase of central bank digital currency (CBDC) research project, known as Project Hamilton. The research team developed two distinct CBDC architectures for testing during the experiment. [more] [more-MIT-press][more-MIT-OpenCBDC]
They found that the architecture that was not build on blockchain could handle 1.7 million transactions per second (TPS), with 99% completed within one second.
The architecture built on blockchain “had pretty significant bottlenecks”. It produced 170,000 TPS (above the goal of 100,000 TPS) and while the majority of transactions were processed in less than 0.7 seconds, it didn’t reach the non-blockchain version’s 99% completion threshold until two seconds.
Both architectures were tested for resilience as well, where two large regions of the U.S. lost connectivity, the digital currency system could continue to operate elsewhere and would not suffer any data loss or system disruption.
Moving forward - Phase 2: Reseach topics may look into cryptographic designs for privacy and auditability, programmability and smart contracts, offline payments, secure issuance and redemption, etc.
According to the CEO of the United Arab Emirates-based financial institution, Bank of Sharjah, blockchain and cryptocurrencies are not only difficult to regulate but are also here to stay. Despite this prediction, the CEO admits that many in the banking industry still do not fully understand this technology. [more]
Fed up by the red tape of Big Tech, four former Facebook employees banded together and created a startup focused on Web3 and blockchain infrastructure. Now, they’re planning to launch a blockchain in the near future. [more]
‘Greening’ Bitcoin
Galaxy Digital, the cryptocurrency investment management firm owned by financier Michael Novogratz, has launched an ESG program focused on employing responsible environmental practices in bitcoin mining. [more]
According to data gathered by CoinShare, Bitcoin mining contributes only a small portion of worldwide CO2 emissions, especially when compared to the wide range of services made possible by the cryptocurrency’s use. [more]
Security
3 Feb - DeFi platform Wormhole saw 120,000 wETH tokens (worth over USD325 millions) removed from the platform and distributed between the hacker’s Solana and ETH wallets. [more-1] [more-2] [more-3] [more-4]
Wormhole is a token bridge that allows users to send and receive crypto between Ethereum, Solana, Binance Smart Chain (BSC), Polygon, Avalanche, Oasis and Terra without the use of a centralized exchange.
This is the largest crypto hack of 2022 so far and the second-largest decentralized finance hack to date.
The attack seems to have resulted from a recent update to the project’s GitHub repository, which revealed a fix to a bug that had not yet been deployed to the project itself.
To carry out the attack, the attacker managed to forge a valid signature for a transaction that allowed them to freely mint 120,000 wETH — a “wrapped” Ethereum equivalent on the Solana blockchain, with value equivalent to USD325 million at the time of the theft — without first inputting an equivalent amount.
The Wormhole team has offered a USD10-million bug bounty for the return of the funds.
Parent company, Jump Crypto, has since announced that it had deposited 120 thousand Ether (ETH) into a Solana-Ethereum bridge.
MetaMask and 40 other browser-based crypto wallets could be exploited by new malware “Mars Stealer” - a redesign of a previously known trojan Oski. [more-1] [more-2] [more-tech]
Mars Stealer is an information-stealing malware that steals data from all popular web browsers, two-factor authentication plugins, and multiple cryptocurrency extensions and wallets, i.e. sensitive data are stored in files as
wallet.datthat contains the address, the private key to access this address.
Regulatory
India will regulate crypto with a 30% tax. For many Indian crypto investors, it indicated that their government had removed some of the regulatory ambiguity around cryptocurrencies and was no longer mulling an all-out ban. [more]
Thailand’s revenue department has abandoned a plan to impose a 15% withholding tax on crypto transactions, according to the Financial Times. The news comes amid opposition from traders in the country. The new approach allows crypto-traders in Thailand to offset their annual losses against gains that have been made in the same year. [more]
Hong Kong’s financial regulators have issued new rules restricting virtual asset intermediaries from offering crypto spot exchange-traded funds (ETFs) to retail investors, citing its complexity. [more]
US Treasury targets NFTs for potential high-value art money laundering as it suggested that the increasing use of art as an investment or financial asset could make the high-value art trades vulnerable to money laundering. [more]
Chat-over-coffee
What is Bored Ape Yacht Club? It is a popular series of NFT profile pictures minted on the Ethereum blockchain. They typically sell for many thousands of dollars, with a growing number of high-profile celebrities buying the NFTs. [more]