This Week In Crypto #5
While traditional media outlets are starting to slowly build the euphoria amidst an incipient bull run, regulators are tightening their grip on crypto, and blockchain becomes more and more used as a political tool: Russia is considering receiving Bitcoin for its exports and Ukraine launches the NFT war museum. Without further ado, let’s plunge into the past week’s highlights in crypto:
Madonna joins BAYC
On the joyful part of crypto space, Madonna announced her entrance into the Metaverse by showcasing her new accrued BAYC NFT. With this move she joins a growing group of celebrities like Shaquille O’Neal, Steve Aoki, Snoop Dog, Kevin Haart, Paris Hilton and others, that own a Bored Ape Yacht Club token.
While the adoption continues to bolster it makes us wonder when should we stop claiming “we’re still early!”?
— Madonna (@Madonna) March 25, 2022
Ukrainian NFT war museum
Since the start of the Russian invasion in Ukraine, it was visible that Ukraine had begun to be present in the realm of the blockchain. First, they accepted donations in crypto and they managed to rise over 100 million $. At some point they even hinted to a potential token airdrop for those who donated. In the light of those events, no one is surprised by the launch of an NFT collection, on the contrary, the effervescence that the NFT world has shown in the last month when it came to Ukraine, practically begged for this to happen.
It looks a little surreal to be able to read the phrase “An official collection by the Ministry of Digital Transformation” as a header for an NFT project.
The collection is described as:
A chronology of events of the Ukrainian history of modern times, set in stone. The NFTs are facts accompanied by personal reflections. The formula of each NFT is clear and simple: each token is a real news piece from an official source and an illustration from artists, both Ukrainian and international.
The clock is ticking and the collection will be released on 30th March. Will we witness the creation of a new blue-chip project?
While Russia uses tanks to destroy Ukraine, we rely on revolutionary blockchain tech. @Meta_History_UA NFT-Museum is launched. The place to keep the memory of war. And the place to celebrate the Ukrainian identity and freedom. Check here: https://t.co/IrNV0w54tg
— Mykhailo Fedorov (@FedorovMykhailo) March 25, 2022
Russia starts considering accepting Bitcoin as a direct payment
The same technology, completely antagonical statal actor, a different use case than the one choosen by Ukraine.
Russia, through Pavel Zavalny, the head of the Russian energy committee, stated that it will start to accept domestic currencies and Bitcoin from friendly states in exchange for crude oil and/or natural gas. He mentioned explicitly China and Turkey as potential countries that could benefit from this proposed arrangement. On the contrast, “unfriendly states” will have to pay for those products only in rubles or gold.
“You can also trade bitcoins,” he added.
Many observers expected Russia to become more “crypto friendly” after the drastic sanctions imposed by the democratic world. However, it is quite unlikely that this method of payment (Bitcoin) will be used in this specific context, given the fact that China has an ongoing ban on all crypto-related transactions.
A bank from Israel will start to offer crypto trading services
Leumi Bank, one of the largest banks in Israel, announced that will offer crypto trading services through its digital investment platform called Pepper Invest. At the beginning they will let its users to trade only $ETH and $BTC; still, for the average user the platform it will provide a huge benefit: it will automatically calculate and deduct the taxes from each transaction, so no more hassle from “the tax man”.
Uri Nathan, the CEO of Pepper Invest described their new product in the following words:
We are proud to be the first in the Israeli banking system and one of the few worldwide to offer our customers to trade in cryptocurrencies simply, safely and reliably, without the need to download a crypto wallet and with all tax complexities being resolved by the bank. This step is a game-changer and offers our customers a bridge to the new era of investments and to the future of banking.
Another hack in the land of DeFi: CashioApp
CashioApp, a Solana native stable coin provider was hacked. A postmortem was already published.
Please do not mint any CASH. There is an infinite mint glitch.
We are investigating the issue and we believe we have found the root cause. Please withdraw your funds from pools. We will publish a postmortem ASAP.
— Cashio ($CASH) 💵 (@CashioApp) March 23, 2022
The attacker drained all the cashioApp pools and earned around 50 million $, only to send a portion back with a message attached in an Ethereum transaction: “Account with less 100k have been returned. all other money will be donated to charity.” Unfortunately, not even the returned funds can be accessed by the victims, because the attacker returned those back to the pools and those couldn’t be accessed any more, according to Rita Martin, a blockchain investigator at TRM Labs:
However, because the value of Cashio dropped so quickly, people who had put, for example USDC, into a liquidity pool involving Cashio would theoretically not be able to take their USDC out because they can’t put up an equal amount in Cashio. The liquidity pools are coded such that a withdrawal has to be balanced with a deposit of equal value so the pot never dries up. For people to get their money out of these liquidity pools, the price of Cashio would have to recover.
This comes on top of the Wormhole hack from February that concluded with a massive 320 million $ loss. Some people are starting to question the reliability of Solana ecosystem. For those we want to remember the DAO hack from 2016, a hack that almost killed Ethereum. Back then Ethereum was in its infancy, more like Solana is now. Let’s give it at least the patience we provided in the past to other protocols.
EU’s crypto regulation continues its route through adoption without asking for the restriction of PoW
EU launched the debate around a regulatory corpus named Markets in Crypto Assets which aims to control the status of digital assets throughout the Union. There were concerns some weeks ago that amidst this regulatory package a specific provision will be present, one that will ban the use of Bitcoin and the rest of the protocols relying on Proof of Work consensus mechanism.
Apparently we can breathe a sigh of relief. A commitee vote ousted the controversial provision. After all, there is hope that in the European Parliament is a healthy, hopefully representative faction that will find a just equilibrium between the need to regulate the crypto markets, and the necessity to let some of the core features of the blockchain technology untouched.
US Department of Justice charges the scammers behind an NFT rug pull
Sometimes it seems that all the scammers from the entire world decided to make a living in the Metaverse. They were probably encouraged by the apparent non reglemented status of the crypto market and the pseudonimity that blockchain provides.
Two 20 years old are already in the custody of the authorities. Seemingly they advertised an NFT project (Frosties) with a road map full of promises without any desire to implement those. In January they sold the whole collection consisting in 8888 NFTs in about an hour, raising around 1.3 million $ and then rug pulled in the classic style: deleted the project’s website and all it’s socials.
The frosting of this news is that they were preparing another rug pull with the same “modus-operandi” used in the first one at the moment of the arrest.
Some people fail to understand that when you charge money in exchange for a service that you don’t intend to perform – it’s called fraud, disregarding the medium you use to conduct your “business”. You don’t have to believe me, just read the statement of one of the special agents involved in the case:
NFTs represent a new era for financial investments, but the same rules apply to an investment in an NFT or a real estate development. You can’t solicit funds for a business opportunity, abandon that business and abscond with money investors provided you. Our team here at IRS-CI and our partners at HSI closely track cryptocurrency transactions in an effort to uncover alleged schemes like this one.
This action of the US justice system represents a first but we expect that definitely isn’t the last one.