Cryptospace Spotlight 2022 #9 (27 Feb 2022)
zkEVM moving ahead of schedule, DAO attempting to buy a NFL team, and EU looking into accepting crypto through regulation!
Technology and Industry
Web browser Opera has integrated with DeversiFi, a decentralized exchange (DEX) powered by Starkware’s Layer 2 (L2) scaling solution, in a bid to offer faster and cheaper transactions within its mobile browser wallet. [more]
Previously, Opera has unveiled its “Crypto Browser Project” meant to offer users direct access to Web 3 services across multiple networks. The project's beta version is already available with a built-in non-custodial wallet for Windows, Mac, and Android users. [more]
zkSync, a protocol responsible for implementing Ethereum scaling platforms announced the test network release of an Ethereum Virtual Machine compatible Zero-Knowledge rollup (zkEVM) years ahead of schedule. [more]
A decentralized autonomous organization (DAO) is looking to purchase a NFL football team Denver Broncos that is up for sale with a price tag of around $4 billion. [more]
Ex-Meta coders is raising $200 million at a $2 billion valuation to bring back Diem project (formerly known as Libra initiated by Facebook/Meta). The people with knowledge of the deal said Andreessen Horowitz (a16z) and several other crypto venture capital firms were involved. [more]
Circle valued at USD9 billion and now doubled from the initial agreement in July that valued it at USD4.5 billion after negotiation [more]
Ukraine government received donation of around USD5 millions in crypto through Bitcoin and Ethereum wallets listed on Twitter [more]. Ukraine minister also mounts effort to surveil Russian politicians’ crypto wallets [more]. Meanwhile, Crypto companies were seen extending help to Ukrainians [more].
Regulatory
EU expressed open to cryptocurrencies but regulations must first be strengthened to prevent fraud. [more]
Christine Lagarde, president of the European Central Bank (ECB), has called on lawmakers to approve a regulatory framework on crypto, hinting at potentially preventing Russia from getting around economic sanctions. [more]
Russia’s finance ministry opposes giving bitcoin legal tender status as the country moves forward with crypto regulatory plans [more]
The high court of China’s southeastern Guangdong province has ruled cryptocurrency investment activities are not protected by law, further clarifying that crypto is not a legitimate currency in the mainland. [more]
Security
Interesting picks from Chainalysis - The 2022 Crypto Crime Report (Feb 2022)
Cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020. In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower. However, we also have to balance the positives of the growth of legal cryptocurrency
usage with the understanding that $14 billion worth of illicit activity represents a significant problem.
Scamming revenue rose 82% in 2021 to $7.8 billion worth of cryptocurrency stolen from victims. Over $2.8 billion of this total came from rug pulls.
Cryptocurrency theft grew even more, with roughly $3.2 billion worth of cryptocurrency stolen in 2021 — a 516% increase compared to 2020. Roughly $2.2 billion of those funds were stolen from DeFi protocols, 1,330% increased from 2020. In other words, as DeFi has continued to grow, so too has its issue with stolen funds. Most instances of theft from DeFi protocols can be traced back to errors in the smart contract code governing those protocols, which hackers exploit to steal funds.
With the rise of DeFi and the extensive smart contract capabilities that power those platforms, deeper vulnerabilities have begun to emerge around the software under-pinning these services. In 2021, code exploits and flash loan attacks—a type of exploit involving price manipulation— accounted for a near-majority of total value stolen across all services at 49.8%. And when examining only hacks on DeFi platforms, that figure
increases to 69.3%.
These two dangers—inaccurate oracles and exploitable code—underscore the need for the security of both. Fortunately, there are solutions. To ensure pricing accuracy, decentralized price oracles like Chainlink can protect platforms against price manipula-
tion attacks. To ensure the security of smart contracts, code audits can steel programs against common hacks like reentrancy, unhandled exceptions, and transaction order dependency.
But code audits aren’t infallible. Nearly 30% of code exploits occurred on platforms audited within the last year, as well as a surprising 73% of flash loan attacks.
Overall, cybercriminals have laundered over $33 billion worth of cryptocurrency since 2017, with most of the total over time moving to centralized exchanges. For comparison, the UN Office of Drugs and Crime estimates that between $800 billion and $2 trillion of fiat currency is laundered each year — as much as 5% of global GDP. For comparison,
money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021.
Money laundering is a plague on virtually all forms of economic value transfer, and this is to help law enforcement and compliance professionals be aware of just how much money laundering activity could theoretically move to cryptocurrency as adoption of the technology increases.
The biggest difference between fiat and cryptocurrency-based money laundering is that, due to the inherent transparency of blockchains, it is easier to trace how criminals move cryptocurrency between wallets and services in their efforts to convert their funds into cash.