Cryptospace Spotlight 2022 #7 (13 Feb 2022)
DOJ seized $3.6 billion in crypto from 2016 Bitfinex hack, white-hat hacker awarded 2 million after critical disclosure, and Russia moving ahead with crypto adoption!
Technology & Industry
Intel plans to roll out energy efficient crypto mining chip - blockchain accelerator. Among its first customers for the accelerators, which help facilitate energy efficient crypto mining, are Block (formerly Square), Argo Blockchain, and the crypto mining startup Griid Infrastructure. [more]
Polygon raises $450M from Sequoia Capital India, Galaxy, SoftBank to support their work in Web3 applications and zero-knowledge technology. [more]
Uber CEO Dara Khosrowshahi said the ride-sharing giant would consider accepting cryptocurrencies as payment but the brakes on buying bitcoin with corporate cash. [more]
Crypto adoption continues. KPMG in Canada adds Bitcoin and Ethereum to its corporate treasury [more]. And BlackRock is preparing to offer a cryptocurrency trading service to its investor clients[more]. UN continues to back NFT projects with the marking of International Women's Day with Boss Beauties Ethereum NFTs - the female-led project. [more]
Cryptocurrency seen as donation medium. Blockchain researcher Elliptic noted that Bitcoin donations to Ukrainian volunteer and hacking groups have soared from USD6,000 in 2020 to USD550,000 in 2021. It suggests digital currencies are growing in importance as a funding method for volunteer groups backing Ukraine's government as Russian troops massed near its border grow. [more]
Regulatory
Russia moved forward with crypto adoption after Russian government and the country’s central bank have reached an agreement to draft legislation or amend existing laws recognizing crypto as a form of currency. [more]
The Switzerland-based Financial Stability Board (FSB) reportedly "going full steam" on the issue of developing global regulatory standards for the crypto asset market. [more]
Why Singapore is one of the most crypto-friendly countries? Among these reasons include consumer protection law, low tax and involvement in blockchain technology projects. [more]
Security
DOJ seized $3.6 billion in crypto from 2016 Bitfinex hack and arrested the New York couple, Lichtenstein and Heather Morgan [more]. Based this recent case, it seems harder to launder cryptocurrencies than one might think[more]. [more-DOJ-press]
Bitfinex said it has been working with the DOJ since the investigation started and will work with the law enforcement agency "to establish our rights to a return of the stolen bitcoin.
IRS-CI detailed the winding and tangled routes the couple allegedly took to launder a portion of the nearly 120,000 bitcoins stolen from the cryptocurrency exchange Bitfinex in 2016. Federal investigators eventually found keys for that wallet in one of Lichtenstein's cloud storage accounts, along with logins for numerous cryptocurrency exchanges he had used.
The IRS's explanation doesn't mention at what point the money in Lichtenstein's bitcoin wallet was converted into the monero that later appeared in those two exchange accounts. Nor, more importantly, does it say how investigators continued to follow the cryptocurrency despite Monero's features designed to thwart that tracing—a feat of crypto-tracing that has never before been documented in a criminal case.
The unspoken message to the Lichtensteins and Morgans of the world: Even if your rap videos and sloppy cloud storage accounts don't get you caught, your clever laundering tricks may still not save you from the ever-evolving sophistication of law enforcement's crypto-tracers.
MakerDAO, the decentralized organization (DAO) behind the DAI stablecoin, is rolling out a bug bounty program with Immunefi - crypto/Web3 bug bounty service platform. With a maximum single payout of $10 million in DAI, MakerDAO’s bug bounty program claims to be not only the largest hosted on Immunefi, but also the biggest in the entire tech space. [more]
6 Feb - The Meter Passport token bridge platform lost USD4.4 million due to a smart contract hack. [more]
USD4.4 million in Binance Coin (BNB) and wETH were minted through a “wrong trust assumption” in the code, according to a Sunday statement from the Meter team. In this case, an arbitrary amount of Ether (ETH) was deposited to Meter, which the hacker used to mint tokens using the vulnerability.
After draining Meter of its BNB and wETH reserves, the attacker sold the BNB on SushiSwap, a popular decentralized exchange. This led to a 77% crash in the price of BNB on Hundred Finance’s Moonriver platform at the time.
A number of opportunists then took advantage of the price dip by buying cheap BNB. They used the tokens as collateral on Hundred Finance to take out loans, causing Hundred Finance to lose $3.3 million through under-collateralized loans.
10 Feb - DeFi platform Dego Finance lost USD10 million to hacker with its address providing liquidity on DEXs, UniSwap and Pancake Swap, hacked and DEGO pairs liquidity provided by the team was drained. [more] [more]
According to the blockchain security and analytics company Peckshield, the exploiters withdrew more than USD10 million from Dego Finance as well as from GameFi Incubator Cocos-BCX. The company’s data showed that funds from 13 addresses were drained, which belonged to Binance Smart Chain (BSC), Ethereum, and Cronos.
While Peckshield suspected a rug pull, Dego Finance clarified that they were exploited due to compromised key [more].
Dego Finance updated that a “total of 602,562.35 DEGO tokens are still in the hacker’s possession but cannot be liquidated in major exchanges since the lockdown.” and will “thoroughly examined on-chain and exchange records to keep traces of funds and to identify the hacker.”[more].
About Dego Finance: Launched in 2020, Dego Finance is a decentralized ecosystem that offers a diverse combination of non-fungible token (NFT) and decentralized finance (DeFi) tools. To date, Dego Finance’s developers remain anonymous.
12 Feb - The Ethereum layer-2 solution Optimism was alerted by a white hat hacker of a critical bug in a smart contract. The bug was fixed and USD2 million in bug bounty was paid - one of the largest bounty to date. [more-1][more-2][more-Optimism-press]
The bug was first discovered by white-hat hacker and iOS jailbreak software Cydia developer Jay Freeman.
In a deep-dive blog post, Freeman explained that the bug, “would allow an attacker to replicate money on any chain using their "OVM 2.0" fork of go-Ethereum.”
According to the Optimism team, “The bug made it possible to create ETH on Optimism by repeatedly triggering the SELFDESTRUCT opcode on a contract that held an ETH balance.”
In a blog post, the Optimism team noted that its chain history showed that the bug had not been exploited, except for an accidental activation by a staffer at Ethereum data startup Etherscan, but “no usable excess was generated.”