Cryptospace Spotlight #34 (21 Aug 2022)
Acala's stablecoin lost peg after billions were mint due to its LP exploitation, cBridge suffered front end attack, and one might not have truly own a NFT after all!
Technology and Industry
A recent research on NFTs noted that the industry likely has a “bright future.” It also pointed out that, in most cases, when buyers purchase NFTs, they do not receive the appropriate IP rights. [more][more-galaxyresearch]
During the research, Galaxy Digital discovered that the proper commercial rights to BAYC and other collections by Yuga Labs are allegedly not transferred to purchasers of the NFTs.
This finding noted the contradiction to Yuga Labs’ terms of ownership. According to Yuga Labs, when one purchases a BAYC NFT, one owns the underlying Bored Ape “completely.”
However, there is absolutely no provision for transfer of intellectual property (IP) rights to the purchaser of the BAYC, the research claimed. This indicates that, in a legal sense, the purchaser allegedly owns no IP rights to the BAYC. The same issue exists with other collections like MAYC and BAKC.
The NFT lending platform BendDAO with approximate 3% of the entire Bored Ape collection, and many NFTs have recently entered the “danger zone” of liquidation. [more]
The problem is brewing at BendDAO, a peer-to-peer lending service that lets users borrow ether (ETH) against their NFTs. Customers can typically take out a loan equal to 30% to 40% of the NFT collection’s floor price, or the minimum price to purchase one on the open market, with the NFT pledged as collateral.
With the floor prices tumbled in recent months, 45 of the 272 Bored Apes with BendDAO loans tied to them are now in the platform's “danger zone,“ and could be forcefully sold.
Aztec Network, a privacy and scaling tool on Ethereum, took steps to prevent illicit use of its service after FTX warned its “users not to interact with Aztec”. [more]
As the crypto world gears up for the Ethereum Merge next month, the number of Ethereum Name Service (ENS) addresses created double and surpassed 2 million within 4 months. [more]
Tether attestation report indicated 58% drop in its commercial paper holdings. [more]
Coinbase has been sued for stealing its users fund and closing their accounts without authorization. [more]
Singapore-based crypto lender Hodlnaut said it is facing “pending proceedings” and laid off 80% of its employees, or "approximately 40 employees". [more]
Swyftx, an Australian-based crypto exchange, has announced cutting its workforce by 21% to minimize the cost and survive in the bear time. [more]
Gordon Ramsay’s Hells Kitchen joins The Sandbox metaverse. [more]
Policy and Regulation
United States -
FDIC orders crypto companies to cease 'misleading' claims - they include FTX US, Cryptonews.com, Cryptosec.info, SmartAsset.com, and FDICCrypto.com. [more][more-letter][more-FDICbulletin]
The SEC sued startup founder John Joseph Roets and three entities he controls for raising $16.5 million in Initial Coin Offering (ICO). The court filing, in the US District Court for the Western District of Washington, charges the defendants with violating the Securities Act of 1933. The SEC is requesting Dragonchain return the $16.5 million with interest. [more]
Philippines - The Central Bank of the Philippines issued a warning note cautioning the country's citizens not to deal with Virtual Asset Service Providers (VASPs) that are either unregistered or domiciled abroad. [more]
South Korea - Financial Services Commission (FSC) identified and working with other authorities to clamp down 16 crypto exchanges allegedly operating in the country without registration. The exchanges in question were named as KuCoin, MEXC, Phemex, XT.com, Bitrue, ZB.com, Bitglobal, CoinW, CoinEX, AAX, ZoomEX, Poloniex, BTCEX, BTCC, DigiFinex, and Pionex. [more]
Ukraine - Vice Prime Minister of Ukraine said that the country spent its $54 million of its crypto donations on drones and military software among other expenses. [more]
South Africa - The Prudential Authority of the Reserve Bank of South Africa sent out guidelines to its subsidiaries in an effort to prevent illicit activities, encouraging banks not to cut all ties with cryptocurrency. [more]
Security and Risk
14 Aug - DeFi Acala Network saw its stablecoin (aUSD) value plummet 99% after its iBTC/aUSD liquidity pool was exploited due to misconfiguration. Its stablecoin aUSD was minted without necessary collateral. [more-Acala] [more][more-incidentreport]
Acala noted that over 3 billion aUSD was erroneously minted, seeing its per token value drop to $0.01 at one point
Acala put its network in maintenance mode to freeze funds and eventually managed to recoup a significant portion of the uncollateralized tokens.
Following that, the Acala community proposed and voted on a referendum to identify and destroy the over 1.2 billion tokens, returning its dollar peg to parity at $1.
Acala continues to monitor the another 1.6 billion aUSD and other tokens (such as DOT and iBTC) that remain with the 16 identified addresses from the exploitation.
18 Aug - Cross-chain protocol Celer Network’s cBridge suffered front end attack - Domain Name System (DNS) hijacking. Some of its users were affected but its contract was not affected. [more]
Celer requested all users to review their contract addresses and perform necessary revocation of approval.
Celer indicated that it will compensate all affected users.