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🆘 Monero’s CCS Wallet Was Exploited, Attacker Drains $460,000 in Nine Transactions
Monero’s CCS wallet was exploited on September 1, 2023, as revealed by the decentralized community-driven project. It has been reported that the attacker drained the wallet through nine transactions, depleting its entire balance of 2,675.73 XMR, which is valued at approximately $460,000. Chinese cryptocurrency reporter Colin Wu, known for his X page, Wu Blockchain, provided insights into the Monero CCS hack, which is still surrounded by mystery.
Wu also highlighted the theory by blockchain security firm SlowMist, which suggests a “loophole in the Monero privacy model” as the source of vulnerability. Monero’s disclosure revealed that the CCS, funded by donations, held a total balance of 2675.73 XMR until September 1. It was not until November that Monero developer Luigi noticed the complete theft of the wallet holdings. Moonstone Research meticulously tracked the attacker’s transactions and concluded that the exploiter was likely a user of the Monerujo wallet with the PocketChange feature enabled. Monerujo, an Android-based non-custodial Monero wallet, offers PocketChange to address Monero’s limitations by dividing funds into multiple “pockets” or “notes.”
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🇨🇭 Swiss bank launches bitcoin and ether custody and trading services, in partnership with SEBA
One of Switzerland’s largest cantonal banks has launched digital asset custody and brokerage services for its clients, in partnership with SEBA Bank. This week, St. Galler Kantonalbank announced the launch of custody and trading services for bitcoin and ether to a select group of clients. SGKB added that it has plans to expand its digital asset offerings with the addition of more cryptocurrencies, based on client demand. SGKB is using Swiss-based SEBA Bank to provide digital asset brokerage and custody services.
"St.Galler Kantonalbank and SEBA signed the contract earlier this year, after a short implementation project, SGKB is now ready to offer access to cryptocurrencies to a selected group of clients, in a first step bitcoin and ether, other currencies will follow shortly," Bieri told The Block. This week's launch marks the first step for SGKB into the digital asset space. The fifth-largest Swiss cantonal bank stated the partnership with SEBA Bank will help its clients integrate cryptocurrencies into their existing investment portfolios. "Thanks to our cooperation with SEBA Bank, we’ve implemented a straightforward initial setup, which allows us to learn and grow well aligned to our clients’ needs," St. Galler Kantonalbank Head of Market Services Falk Kohlmann said.
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🏦 Kraken To Suspend All USDT, WBTC Deposits In Canada
Kraken is the next major Canadian exchange to wind down support for stablecoins amid regulatory pressure. Crypto exchange Kraken has confirmed that it plans to close all trading, deposits, and withdrawals for Tether USD (USDT), Wrapped Bitcoin (WBTC), and other reserve-backed assets in Canada. According to an email received by CryptoPotato from Kraken on Friday, the firm is now “required” to suspend deposits, withdrawals, and trading in Canada for Tether (USDT), Dai (DAI), Wrapped Bitcoin (WBTC), Wrapped Ether (WETH), and Wrapped Axelar (WAXL).
As of November 30 at 12:00 p.m. EST, deposits and trading for each coin will end. Withdrawals will end on December 4 at 11:00 a.m. EST, with such assets remaining on the platform to be converted into USD at the prevailing market rate on December 5. “If you hold balances in any of USDT, DAI, WBTC, WETH, or WAXL we encourage you to consider one of our supported trading pairs or to withdraw prior to November 30th,” wrote Kraken. Back in April, rival exchange Coinbase also announced its cancellation of support in Canada for stablecoins including USDT, RAI, and DAI, for failing to meet the company’s listing standards. The suspension took effect last month. Crypto.com announced a similar stablecoin halt in January, specifically citing instructions from the Ontario Securities Commission (OSC).
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🟣 Kraken to share user data with IRS next month following June court order
Crypto exchange Kraken is set to share select user information with the Internal Revenue Service next month after being mandated by a court order received in June. "Kraken expects to share this information covered by the court's order in early November 2023," reads an email the crypto exchange sent to affected U.S. users on Wednesday that was seen by The Block. Kraken confirmed the email and reiterated some of the comments made in it.
The IRS-Kraken battle began in May 2021 when a U.S. federal court authorized the tax agency to serve a John Doe summons on the crypto exchange and its subsidiaries in a bid to catch tax dodgers. The IRS at the time said that Kraken had failed to comply with the summons. Then in February of this year, the tax agency filed a court document seeking permission to enforce the summons, and in June, a federal court ordered Kraken to turn over user information to the IRS. The IRS had sought more extensive information, including users' IP addresses, employment details, sources of wealth, net worth, and banking information. However, Kraken said in Thursday’s email that it had successfully convinced the court to "substantially reduce" the number of affected clients and the amount of client data it must produce.
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🏦 Crypto Exchange Coinbase Chooses Ireland as EU MiCA Hub
America’s leading crypto exchange, Coinbase, announced it has chosen Ireland as its “MiCA hub” in the European Union. The trading platform said the decision is part of the realization of the second phase of its “Go Broad, Go Deep” strategy for international expansion. Coinbase currently holds an e-money institution license and a virtual asset service provider (VASP) registration in Ireland as well as licenses and registrations in other EU countries
When it’s granted, the latter will permit the exchange to offer its services across the Union, operating under a single license and regulator. MiCA, which was adopted earlier this year, is set to enter into force in the member states by the end of next year. In the U.S., Coinbase has been engaged in a legal battle with the Securities and Exchange Commission which has accused it and other major crypto platforms like Binance of illegally trading unregistered securities. The exchange has been among those in the industry calling for introducing dedicated legislation rather than applying existing U.S. laws to crypto assets through courts. The American crypto giant has welcomed the adoption of MiCA, describing it as a pivotal moment for cryptocurrencies.
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🏦 Coinbase Advanced Customers Can Now Trade Derivatives
Crypto exchange Coinbase has extended its services to eligible non-U.S. retail customers, introducing perpetual contract trading through its Advanced platform. The platform now supports perpetual contracts for Bitcoin, Litecoin, Ether, and XRP, all settled in USDC stablecoin. These contracts, accessible exclusively to non-U.S. retail customers meeting specific criteria, offer up to 5X leverage for Bitcoin, Ether, and Litecoin, while XRP contracts provide up to 3X leverage.
The move aims to tap into the derivatives market, providing traders with a seamless experience by integrating highly liquid spot markets with derivatives. Coinbase Advanced customers can employ advanced order types, TradingView charts, and APIs for automated trading, enhancing their trading strategies. Presently, perpetual futures trading is limited to the Coinbase Advanced webpage, but the company plans to expand its services to mobile platforms soon, according to a press release. This development follows regulatory approval from the Bermuda Monetary Authority, granting Coinbase International Exchange the green light to offer perpetual futures to Coinbase Advanced customers outside the U.S. To participate, non-U.S. retail customers must undergo standard assessment checks, ensuring eligibility and compliance.
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💰 Crypto funds recorded net inflows for third consecutive week led by Bitcoin
Digital asset investment products at asset managers such as CoinShares, Bitwise, Grayscale, ProShares and 21Shares recorded net inflows for the third consecutive week. The funds added a net $15 million — dominated by Bitcoin. Bitcoin products saw inflows of $16 million last week, pushing the year-to-date inflows to $260 million, according to CoinShares’ latest report. Short-Bitcoin funds also observed inflows of $1.7 million. The data, as of Friday’s close, is “unlikely to capture the positive news out of the U.S. regarding the SEC not appealing the Grayscale legal challenge.
Solana investment products added a further $3.7 million to the $24 million registered in the prior week. XRP funds also managed modest inflows of $0.42 million — the 25th consecutive week of positive inflows for the product. “The consistent inflows underscore the investment community’s support, especially considering successful legal challenges against the SEC,” Butterfill said. However, the flows weren’t all positive, with Ether funds witnessing outflows of $7.4 million — reversing most of the $10 million of inflows added following the launch of six Ether futures ETFs in the prior week. “This perhaps reflects ongoing protocol design concerns,” Butterfill said.
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📣 Perpetual Trading Protocol GMX Bags Biggest Chunk of $40M Arbitrum Grant
Several projects built on the Arbitrum blockchain have bagged a cumulative stash of $40 million in ARB tokens as part of a short-term incentives program (STIP) round that ended late Thursday. A tally shows 29 Arbitrum projects pitched their product and services to token holders over the past week, hoping to win votes for a chunk of the 50 million ARB tokens, worth nearly $40 million at current prices. The proposal for the grant was floated and approved earlier in September.
The STIP is a one-time distribution and grantees cannot convert ARB rewards to other tokens or participate in any governance activities. The proposal for the grant was floated and approved earlier in September. Perpetual trading protocol GMX bagged the most rewards at 12 million ARB, worth just over $10 million, followed by Gains Network at 7 million ARB. Ether staking powerhouse Lido Finance was among the surprise duds, failing to win approval amid concerns that it could control a third of all staked ether tokens. These projects are now expected to use the tokens to provide increased rewards for users that support those protocols, such as by supplying liquidity or using services, in a move that may attract funds to the blockchain as traders hunt for investment strategies.
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🇪🇺 DeFi Risk In EU Poses Challenge To Regulators
The cryptocurrency ecosystem’s decentralized finance (DeFi) space has been abuzz with innovation, prompting the European Securities and Markets Authority (ESMA) to voice its concerns and insights into the DeFi risk in EU. ESMA, the European Union’s financial markets supervisory authority, has recently released a comprehensive report highlighting DeFi risk in EU. While acknowledging the promised benefits, such as greater financial inclusion and innovative financial products, ESMA also pointed out “serious risks” that investors might encounter.
One significant risk highlighted in the report is liquidity risk. ESMA emphasizes the speculative and volatile nature of many crypto assets, comparing the 30-day volatility of Bitcoin and Ethereum to the Euro Stoxx 50 index, revealing that cryptocurrencies are on average 3.6 and 4.7 times more volatile than the stock index. Moreover, ESMA argues that DeFi doesn’t entirely eliminate counterparty risk, even with the theoretical advantages of smart contracts. Smart contracts are not immune to errors or flaws, raising concerns about their reliability. ESMA’s examination of the DeFi sector also reflects the challenge it poses to regulators. As an EU agency set to establish rules under the Markets in Crypto Assets Regulation (MiCA), ESMA is confronted with the complexities of a market that operates differently from traditional centralized entities.
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💰 Bitcoin Lingers in a 'Neutral' Phase as the Fear and Greed Index Signals Market Consolidation
A week prior, bitcoin (BTC) was priced at $27,189 per unit. Over the past day, its value danced between $28,103 and $27,770. This week witnessed a 2.6% climb in bitcoin’s value, and it surged by 7.9% on a 30-day scale. Throughout these fluctuations, the Crypto Fear and Greed Index (CFGI) has unswervingly projected its “neutral” position — not just today, but yesterday and the entire past week. In essence, the CFGI serves as a barometer, gauging the prevailing mood of the bitcoin marketplace.
The rationale being that overwhelming fear can depress prices too much, while rampant greed can inflate them excessively. By tapping into current sentiments, traders could pinpoint potential buy or sell moments. Interpreting the CFGI, one encounters phases like extreme fear, fear, neutral, greed, and extreme greed. On October 8, 2023, alternative.me pegs the CFGI at 50, a slight rise from last week’s 48. Coinmarketcap.com’s “Fear and Greed” index echoes this sentiment, marking a neutral score of 46 on Sunday. With the market exhibiting such neutrality and bitcoin gravitating towards a more streamlined range, it’s evident the market remains indecisive. Being neutral or ambivalent suggests the absence of a prevailing sentiment.
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🪙 Ether ETFs Struggle to Gain Traction in First Week
Ether (ETH) and bitcoin (BTC) were buoyed to one-month highs last week as six ether futures ETFs went live in the U.S. on Monday, with traders expecting high demand for the products. However, their performance was pretty muted. Less than $2 million were traded across the various ETFs on Monday, with poor volumes throughout the week prompting analysts to write down their bullish outlook and pivot to bitcoin investments instead. The ether futures ETFs had 0.2% of trading volume compared to BTC futures day 1 of trading.
The ether futures ETFs had 0.2% of trading volume compared to BTC futures day 1 of trading. Some analysts pointed to a lack of institutional demand for ether and others said it’s due to the macroeconomic environment. “Interest rates are at 5.5%, if you list any kind of ETF in this environment you are going to see low volumes,” said Sui Chung, CEO of CF Benchmarks, in an interview with CoinDesk. “It's the same with equities ETF volumes this week," added Chung. "There might be more interest in ether futures ETFs as the macroeconomic situation changes but right now investors are too busy putting money into bank accounts.”. Blackbird Labs, an app and loyalty program that's attempting to connect restaurants and their customers via its crypto-powered app, announced on Wednesday.
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💰 Sam Bankman-Fried Lost Half a Million Dollars Every Day After Alameda Launched, Michael Lewis Claims
Millions of dollars from the first-ever tranche of funds raised by Sam Bankman-Fried were almost lost after trading firm Alameda Research initially started in 2017, author Michael Lewis claimed in his biography of Bankman-Fried “Going Infinite.” The then 26-year-old SBF intended to invest these funds in the growing and inefficient crypto markets, capturing price differences across markets and creating high-frequency trading (HFT) strategies to pick up pennies every few seconds.
Most of these were losing bets from the start with Alameda losing millions of dollars in its first months. It lost over $500,000 every day throughout one such month, Lewis wrote, while some trading funds had “simply vanished” due to poor fund management. Another bot called Modelbot, which was programmed to trade nearly 500 tokens on some thirty exchanges, turned out to be yet another dud initially. It made no distinction between deeply-liquid crypto majors such as bitcoin (BTC) and ether (ETH) and very thinly-traded memecoins – sparking concerns among early Alameda staff that it could end up evaporating all of the raised money. The tides finally changed after Gary Wang and Nishad Singh (both FTX directors who have since pled guilty to fraud in the ongoing trial) joined the firm.
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💰 Decentralized Exchange Bluefin’s New Version Goes Live on Sui Network
Decentralized orderbook exchange Bluefin’s upgraded version called “v2” went live on the Sui network, the company Tuesday said in a press release. The platform’s new iteration adds features such as sub-second, optimistic trades, spot and cross-margin capabilities and a privacy function to trade without a crypto wallet. The first version of the platform – Bluefin v1, which lets users trade perpetual swaps on Ethereum scaling network Arbitrum – will remain active, the company said.
“Over the course of this year, we’ve rewritten our codebase and rebuilt the exchange on a new underlying technology,” Bluefin said in the press release. “With the next version of the exchange, we want to build a decentralized platform that can match the features and trading experience of centralized exchanges.” Bluefin’s development comes at a time when crypto trading volumes have dropped significantly as the grueling bear market drags on. DEX volumes averaged at around $10 billion per week recently compared to topping over $60 billion last November, according to DefiLlama data. Decentralized exchanges (DEXs) came to the forefront last year after a handful of centralized platforms including Sam Bankman-Fried’s FTX blew up in a spectacular fashion.
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🏦 Gemini CTO Pravjit Tiwana leaving company: Bloomberg
Crypto exchange Gemini, the company founded by entrepreneur brothers Tyler and Cameron Winklevoss, is losing its chief technology officer, according to Bloomberg. Formerly at both Amazon and Disney, Pravjit Tiwana will be leaving his role as Gemini's CTO this month, the report said, citing two anonymous sources. Tiwana also served as CEO of Gemini APAC. Tiwana and Gemini did not immediately respond to a request for comment.
Chief Technology Officer and APAC CEO, Pravjit Tiwana, is leaving Gemini, according to a report citing two anonymous sources. The CTO worked to make Gemini's culture more similar to Amazon's in a move that resulted in some employees leaving, according to the report. Tiwana's responsibilities at the firm included overseeing product, engineering and design, the report also said. For months, Gemini has been engaged in a long, drawn out fight with Genesis and its parent company Digital Currency Group. The Securities and Exchange Commission has also sued Gemini. Formerly at both Amazon and Disney, Pravjit Tiwana will be leaving his role as Gemini's CTO this month, the report said, citing two anonymous sources.
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💰 Solana Drops 5% as FTX-Linked Address Moves SOL to Kraken, Binance
SOL is down almost 6% in the last 24 hours and is currently trading hands at around $39.82, per CoinGecko. The bearish move comes amid some hefty SOL transfers from FTX-linked Solana addresses, per data from Solana block explorer Solscan. In September, a court approved the liquidation of $3.4 billion worth of crypto assets, including $1.16 billion in SOL, belonging to the FTX estate—the remains of Sam Bankman-Fried’s crypto empire after its collapse last year.
The court-approved liquidation plan set a cap of $100 million worth of crypto assets per week, which is likely to produce continued sell pressure on Solana for as long as the process lasts. The broader picture still remains bullish for the token, as it continues to boast a whopping 23.9% increase over the last week, far outpacing the rest of the top 10 largest cryptocurrencies by market cap. In the past 24 hours, roughly $10.31 million SOL has been liquidated. Of that sum, more than $7 million were levered-long traders. Per Solana block explorer Solscan, the address labeled "FTX Cold Storage #2" sent more than 250,000 SOL tokens, worth roughly $9.8 million at press time, to the crypto exchange Kraken late last night.
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🏦 Coinbase US Customers Can Now Expand Bitcoin Futures Trading
Coinbase Global has unveiled an exciting opportunity for its eligible retail Coinbase US customers, as they can now engage in futures trading tied to Bitcoin and Ether. This development, disclosed in a recent blog post, emphasizes that only US customers with advanced trader status will have the privilege of trading these futures contracts. Coinbase’s foray into the futures market follows its clearance in August to operate as a futures commission merchant (FCM) under the regulations of the National Futures Association.
Futures contracts, while offering unique trading opportunities, are generally considered riskier due to the inherent volatility of cryptocurrencies and the potential for amplified gains and losses through leverage, making risk management crucial for Coinbase US customers. According to Coinbase Financial Markets CEO Andrew Sears, futures provide Coinbase US customers with various benefits, including risk hedging, portfolio diversification, leveraging, and speculation on market direction. This initiative is a significant step toward expanding the trading horizons for Coinbase US customers in the rapidly evolving crypto market. Users can take advantage of the nano-Ether contract to manage risk, trade on margin, or speculate on Ether’s price.
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🇸🇦 Saudi Arabia's NEOM megaproject proposes investing $50 million in Animoca Brands
The strategic investment arm of Saudi Arabia's NEOM megaproject has proposed investing $50 million in crypto gaming investment company Animoca Brands. The NEOM Investment Fund plans to invest $25 million via the issuance of convertible notes at a conversion cap price of A$4.50 per share. The remaining $25 million will be invested in purchasing Animoca Brands' shares on the secondary market. The partnership has been proposed in a memorandum of understanding, according to a press release from both parties.
The goal of this partnership is to promote the development of web3 infrastructure in the NEOM region, in line with the Saudi Vision 2030 plan. "Web3 technology and infrastructure development will not only be an important foundation of NEOM’s tech stack and architecture but also has the potential to revolutionize global industries. By partnering with a market-leading company like Animoca Brands, we hope to accelerate web3 technology development and adoption," NEOM Investment Fund CEO Majid Mufti said. The NEOM infrastructure project is packaged as a futuristic eco-city, to attract inward investment and tourism. The scheme is part of Crown Prince Muhammad bin Salman's bid to diversify the Saudi economy away from its dependence on oil.
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🟠 Binance Appoints New Regional Head for Eastern Europe and Central Asia
Binance, the largest digital assets exchange by daily trading volume, has appointed Kyrylo Khomiakov as its new regional head for Central and Eastern Europe (CEE) and Central Asia. Until now he was Binance’s General Manager for CEE. Khomiakov will manage the company’s teams, focus on enhancing products and services and optimizing user experience to grow its business, a press release detailed. He will also oversee Binance’s marketing strategy and contacts with governments.
“Having Kyrylo, who possesses a deep understanding of these local markets and plays an integral role in the Binance organization, taking responsibility for these regions is crucial. This appointment will ensure an effective allocation of our resources to uphold our position in this part of the world,” said Richard Teng, head of regional markets at Binance. Kyrylo Khomiakov joined the cryptocurrency exchange in January 2022 and was initially responsible for Ukraine before taking charge of the business in the entire CEE region. He will now lead Binance across 14 countries in both Central and Eastern Europe and Central Asia. “We’re focused on building a local presence in CEE and Central Asian countries.
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🪙 Vodafone, Chainlink Show Blockchain Can Support Global Trade Processes
Vodafone's Digital Asset Broker (DAB) has demonstrated blockchain can be used for trade, according to a Tuesday announcement. The telecom giant ran a proof of concept on trade document transfer with Web3 services platform Chainlink Labs, Sumitomo Corporation and InnoWave to address "longstanding challenges in the $32 trillion global trade ecosystem," according to the announcement. The proof of concept enabled devices to act autonomously and produce information that could be translated by a computer to support trade processes.
The companies used Chainlink's cross-chain interoperability protocol (CCIP) to provide security and interoperability as data and tokens were shared across public and private blockchains. “Vodafone DAB and Chainlink are showing how their platforms can be combined to cut through this sea of incompatibility by bridging traditional markets with advanced decentralized platforms," said Jorge Bento, CEO of Vodafone DAB. For instance, cargo vessels detecting a fire could "autonomously relay data to smart contracts via DAB’s platform and CCIP, potentially triggering a marine cargo insurance process," the post said. Vodafone DAB also said it had joined the Chainlink network as a node operator to help developers fetch external data. Chainlink's (LINK) token climbed 7.5% in the 24 hours following the news, according to CoinGecko data.
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🇺🇸 US Treasury plans to designate international crypto mixers as money-laundering hubs: WSJ
The Treasury Department is planning to designate international crypto mixers as money-laundering hubs, citing Hamas' use of them along with other terrorist groups, according to The Wall Street Journal. "Today’s action underscores Treasury's commitment to combating the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cyber criminals, and terrorist groups," said Wally Adeyemo, deputy Treasury secretary, according to the WSJ.
The designation comes shortly after a report from the WSJ that said that said Hamas, along with other militant groups, used crypto as a financing tool ahead of attacks in Israel earlier this month. Sen. Elizabeth Warren, D-Mass., along with more than a hundred other lawmakers including both Democrats and Republicans, said they were concerned about how Hamas raised millions of dollars through crypto in a letter sent to the Biden administration on Tuesday. "As Congress considers legislative proposals designed to mitigate crypto money laundering and illicit finance risks, we urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies," the letter stated.
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📣 Platypus Finance Hack recovers 90% of assets lost
According Cointelegraph, Platypus Finance Hack recovers successfully 90% of the assets stolen in the recent hack. In an announcement on October 17th, the developers disclosed a net loss of “18,000 Avalanche,” valued at $167,400 at the time. Interestingly, the hacker voluntarily returned the funds, and Platypus Finance confirmed that they will not pursue legal action. Thanks to hacker cooperation, Platypus Finance Hack recovers 90% of the assets that were stolen during a recent security breach.
The security breach took place on October 12th when the automated market maker operating. To enhance security, Platypus developers have suspended all liquidity pools and initiated a comprehensive security audit. Flash loan attacks involve hackers exploiting vulnerabilities to borrow cryptocurrencies without providing collateral. The hacker then withdraws these borrowed assets from the protocol, leaving either the users or the protocol treasury responsible for the debt. This incident marks the third attack on Platypus this year, with a previous occurrence in July resulting in a $157,000 loss due to a flash loan attack. Another attack, exploiting the DeFi protocol for $8.5 million, also utilized a flash loan. Following the incident in February, Platypus committed to returning at least 63% of the assets lost by users in the attack through its recovery plan.
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📊 Stablecoin Lender Liquity’s Token Gains 80% in Month as Activity Increases
Liquity, a decentralized borrowing protocol, has seen its native token LQTY rally 80% over the last month, contrasting with sluggish performance in the broader cryptocurrency markets. Liquity is a borrowing and lending platform where users can take out loans denominated in Liquity’s U.S. dollar stablecoin, LUSD, after staking ether (ETH) as collateral. LQTY was trading at $0.75 a month ago and is now around $1.35. Compared to the larger crypto assets, bitcoin has seen a 2% increase over the same time period.
The LQTY token has a market capitalization of about $120 million. And in a sign of just how volatile these smaller cryptocurrencies can be, the price was down 12% on Friday on no notable news. According to the company, the protocol has seen increased activity over the past month, which could be contributing to the price movement. Users who staked in the protocol were paid a collective of around $625,000 over the past month. Users can use the LQTY staking pool to stake LQTY tokens and earn protocol fees, which are paid out in LUSD and ETH. A spokesperson for Liquity said that Bluechip, an independent stablecoin agency, recently gave it an A rating, another factor that might have contributed to the price surge. Ethereum lost 3% and Solana’s SOL gained 20%.
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🇺🇸 BarnBridge DAO votes over response to SEC probe
BarnBridge DAO, which runs a small DeFi protocol, opened a voting process over how it should respond to a Securities and Exchange Commission probe. Voting opened on Tuesday on whether BarnBridge co-founders Tyler Ward and Troy Murray should have the "authority to undertake all actions necessary to comply with the Order of the Securities and Exchange Commission against BarnBridge.”. The move came after BarnBridge attorney Douglas Park told DAO members in July through Discord that the SEC was investigating.
BarnBridge is now asking whether it should pay disgorgement, as required by the SEC’s order, and whether it should “sell all tokens that it is permitted to sell and allow to Ward and Murray to distribute the tokens.” The U.S. regulator has taken legal actions before against decentralized autonomous organizations, or DAOs. The agency said earlier this year that American CryptoFed failed to provide required information about its business management and financial condition. It also had materially misleading statements and omissions, including inconsistencies on whether the tokens are securities, the SEC said. Park said that all work on BarnBridge-related products should be halted and that people shouldn’t be compensated for work they do for the DAO until further notice.
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🪙 A consultant used his personal wallet to save $400 million from being stolen during FTX hack: Wired
During last year’s hack of FTX, consultant Kumanan Ramanathan utilized his personal Ledger Nano hardware wallet to safeguard vulnerable assets when unusual outflows were detected by the staff, according to a Wired investigation. On Nov. 11 2022, unusual withdrawals alarmed former staff members and executives. While FTX later reported losses surpassing $400 million, the efforts of Ramanathan and the FTX team preserved a significant portion of the assets.
Ramanathan, associated with the consulting and restructuring firm Alvarez & Marsall, volunteered to relocate a major portion of the company’s assets to his device, thereby protecting between $400 and $500 million of FTX’s cryptocurrency. The transactions, initiated by former CTO Gary Wang, helped mitigate further losses. The assets were housed on Ramanathan’s device until FTX’s crypto custodian provider, BitGo, had cold storage wallets ready. Subsequently, the exchange collaborated with BitGo, safeguarding over $1.1 billion in total, Wired found. Another $400 million was relayed to the Securities Commission of the Bahamas for protective purposes. This episode transpired shortly after former CEO Sam Bankman-Fried filed Chapter 11 bankruptcy protection.
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💰 Inside SBF’s trial: FTX numbers checked out, except for an $8 billion mystery 'friend'
As customers began to withdraw assets from FTX in Nov. 2022, CEO and co-founder Sam Bankman-Fried asked his co-founder and CTO, Gary Wang, to calculate how much money Alameda Research would need to deposit on the exchange in order to cover the outflows. Wang found that, excluding the accounts of Alameda Research, the sum of FTX customer balances matched the assets in FTX's hot wallets, he testified on Friday under direct questioning from government prosecutors during the fourth day of Bankman-Fried's criminal trial in New York.
Wang only got the full picture, he testified, once Bankman-Fried asked him if he had included "our Korean friend" in the calculations. Confused, Wang checked with Nishad Singh, another former FTX executive, who told Wang that the "Korean friend" actually referred to the $8 billion "fiat@" hole at the heart of FTX's collapse. Wang testified that Singh told him that the fiat@ account balance had been reassigned in FTX's internal database to an account bearing the name "seoyuncharles88@gmail.com," which was granted special privileges so that Alameda Research wouldn't have to pay interest on its line of credit. Bankman-Fried also knew FTX's finances were more visible to the public and to investors than Alameda's, Wang testified. The following day, after being informed of the hole, Bankman-Fried tweeted, "FTX is fine. Assets are fine."
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💰 Former FTX executive once found millions of dollars of airdrops that the exchange didn't know about
Zane Tackett, former head of institutional sales at FTX, once found millions of dollars worth of airdrops that the exchange had no idea about. On The Scoop podcast, Tackett expressed his lack of surprise that so much has been recovered during FTX’s bankruptcy proceedings so far. He said the exchange was a sloppy place with bad accounting. “I remember one time I found millions of dollars worth of airdrops that they had gotten that they didn't know about,” he said.
“I don't think it's that impressive that they did it,” he added. “I think if you two handed this to any crypto firm, like if Binance bought them, they would have found all those assets in like two days and already had it back to the users.” Tackett added that he was surprised the liquidators hadn’t got more of the hacked funds back or worked out who did it. He said that if he had to guess who hacked the exchange, he would say a higher up former FTX or Alameda employee. “And when I talked to Sam about it after — or like when everything was blowing up — he seemed so nonchalant, like, ‘Oh yeah, it was the battle between FTX.US and FTX.com to get assets like it's not lost’. So, I mean, I think he has some information on what happened to it, but I don’t know,” he said.
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💰 Sam Bankman-Fried Lost Half a Million Dollars Every Day After Alameda Launched, Michael Lewis Claims
Millions of dollars from the first-ever tranche of funds raised by Sam Bankman-Fried were almost lost after trading firm Alameda Research initially started in 2017, author Michael Lewis claimed in his biography of Bankman-Fried “Going Infinite.” The then 26-year-old SBF intended to invest these funds in the growing and inefficient crypto markets, capturing price differences across markets and creating high-frequency trading (HFT) strategies to pick up pennies every few seconds.
Most of these were losing bets from the start with Alameda losing millions of dollars in its first months. It lost over $500,000 every day throughout one such month, Lewis wrote, while some trading funds had “simply vanished” due to poor fund management. Another bot called Modelbot, which was programmed to trade nearly 500 tokens on some thirty exchanges, turned out to be yet another dud initially. It made no distinction between deeply-liquid crypto majors such as bitcoin (BTC) and ether (ETH) and very thinly-traded memecoins – sparking concerns among early Alameda staff that it could end up evaporating all of the raised money. The tides finally changed after Gary Wang and Nishad Singh (both FTX directors who have since pled guilty to fraud in the ongoing trial) joined the firm.
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🪙 Vitalik Buterin voices concerns over DAOs approving ETH staking pool operators
Vitalik Buterin, the co-founder of Ethereum, has expressed worries regarding decentralized autonomous organizations (DAOs) exerting a monopoly over the selection of node operators in liquidity staking pools. In a Sept. 30 blog post, Buterin warns that as staking pools adopt the DAO approach for governance over node operators — who are ultimately responsible for the pool’s funds — it can expose them to potential risks from malicious actors.
Buterin highlights the liquid staking provider Lido as an example with a DAO that validates node operators. However, he emphasizes that relying on just one layer of protection may prove insufficient: “To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough,” he noted. Meanwhile, he explains that Rocket Pool offers the opportunity for anyone to become a node operator by placing an 8 Ether deposit, which, at the time of this publication, is equivalent to approximately $13,406. However, he notes this comes with its risks. “The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs,” he stated.
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