This Week In Crypto #1
Bittersweet! That’s the word that describes global crypto in last week’s news summary. The decentralised finance ecosystem had a rough week with three cross-chain bridges being attacked by hackers. India legalises cryptocurrency while the U.S. legislature debates how best to regulate stablecoins. Plus, Kanye West is not interested in NFTs for now.
Three Cross-chain bridges hacked in one week
The standoff between Qubit Finance, a cross-chain bridge built on the Binance Smart Chain (BSC) and a hacker who stole 206,809 Binance Coin (BNB) worth $80million from the decentralised finance (DeFi) platform on Friday spilled into the week with Qubit increasing the White-hat bounty from its standard $250,000 to a whooping $2 million. It also made moves to appeal to the emotions of the hacker.
Later in the week, the DeFi ecosystem was hit again by hackers when Solana’s Wormhole bridge was exploited for 93,750 Ethers. The heist with a value of $325 million, according to Elliptic, a cyber-security firm, is the fourth largest in cryptocurrency history. Jump Crypto, Wormhole’s mother company, has recapitalised the bridge with 120,000 Ethers. Exerting pressure on the hacker, Wormhole offered a $10 million bug bounty to the exploiter in exchange for returning the funds while simultaneously offering a $10 million dollar reward for information leading to the arrest and conviction of the hacker.
As the week was about to end, in yet another attack, hackers pounced on Meter.io, minting a large amount of BNB and WETH tokens, depleting the bridge’s reserve. About $4.4 million was lost in the attack.
Flaws in the smart contract of the DeFi projects allowed hackers to penetrate their security system.
How did the @wormholecrypto exploit work? I joined forces with @gf_256 and @ret2jazzy to reverse engineer the exploit, and now that it's been patched we can finally share it with you👇 pic.twitter.com/lXwD0GLZ3N
— samczsun (@samczsun) February 3, 2022
Wonderland founder Daniele Sestagalli addresses the project’s uncertain future in a Discord AMA
Days after hinting that Wonderland, a decentralised autonomous organisation (DAO) which invests in high growth sectors in the cryptocurrency ecosystem, would close down due to division among its token holders, Daniele Sestagalli, its founder, said among other things in an AMA that he was open to an audit, more multi-signers would be introduced and Wonderland community members must be doxxed.
U.S. Federal Reserve research sees potential in stablecoins but…
A new research released by the Federal Reserve this week examining the potential growth of stablecoins has found that a two-tiered banking system could support stablecoin issuance and a narrow bank approach may provide a stable peg to fiat currencies. It also stated that dollar-pegged stablecoins could serve as a safe haven during times of market distress if they are seen as well-collaterised. Despite the researchers’caution that their findings did not consider all the potential impacts of stablecoins on financial stability, consumer protection, among others, the paper could contribute to the talking point in upcoming committee hearings on stablecoins at the U.S. Congress and Senate on February 8 and 15 respectively.
Digital assets, India’s new money making machine
Indians will now be required to pay 30 percent tax on income from the transfer of digital assets including cryptocurrencies and NFTs, that’s according to the country’s Finance Minister, Nirmala Sitharaman during a budget speech which lasted over two hours. Ms Nirmala described transactions in digital assets as “phenonmenal” and “the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.” And added that the Digital Rupee, a central bank digital currency (CBDC) will be issued from 2022-23. The authorities in India have set a standard for themselves as the country’s estimated 20 million crypto users expect more policy clarity for the $5.3 billion crypto industry. Observers are keen on whether other countries in South Asia will emulating India. Meanwhile, the Central Bank of Jordan is planning to issue its CBDC that will be backed by the Jordanian Dinar and have legal backing.
China allows ‘controlled’ exploration of blockchain technology
In spite of its aversion to cryptocurrency, China is allowing the innovative use of blockchain technology. The project which will be executed in 15 comprehensive and 164 national pilot programmes in selected fields will be supervised by the Central Cyberspace Administration of China and other government agencies. Chinese authorities instructed supervisory departments to monitor the programme and warned that “if the pilot unit (region) has violations of laws and regulations, major hidden dangers or ineffective promotion, the pilot qualification will be cancelled.”
Kanye West is not on the NFT wave. At least for now
While celebrities including Paris Hilton, Snoop Dogg and Tom Brady are jumping on the nonfungible token (NFT) craze and cashing in massively, Hip hop artist, Kanye West is not having it. The artist wrote on instagram that he wanted things that were real and “stop asking me to do NFTs… For now I’m not on that wave. I make music and products in the real world.” But the rapper is not shutting the door against NFTs as he concluded his note with “ask me later.”
Hacker’s $3.55B loot from 2016 quietly moved
About 119,756 Bitcoins, estimated to worth $3.55B, have been moved from a wallet connected to a 2016 attack against Bitfinex in 23 transactions, Elliptic, a Blockchain analytics firm said. The hack is one of the biggest till date. Elliptic was quoted by Coindesk to have said that “It is unlikely that these funds will be cashed out any time soon. Funds from this hack have been slowly laundered for five years now and cashing-out large volumes over a short period of time would draw attention.” The loot was last moved in April 2021 and the funds were laundered through the darknet markets like Hydra and privacy-focused Wasabi wallet, according to Elliptic.
“A waste of time”: Dorsey takes swipes at Meta’s failed crypto project
Bitcoin proponent and former Twitter CEO, Jack Dorsey, said in an interview with Michael Saylor, CEO of MicroStrategy on Tuesday that Facebook’s (now Meta) time developing its crypto project, Libra (later changed name to Diem) should have been dedicated to making Bitcoin more accessible to more people around the world. Libra failed because of many reasons including regulatory obstacles. It eventually sold Diem to Silvergate Capital. Dorsey said Meta “wasted effort and time” working on its stablecoin project.