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Major hacks and investigations against all exchanges in the US. Main events of the week

05.08.2022

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10 min

Bitcoin has fallen by 3,68% over the past seven days. The highest values were reached by the asset on July 30, when 1 BTC was trading at $24 668, the lowest values were registered on August 4 — $22 400 for a coin. As of July 5 at 10:00 UTC, bitcoin exchange rate is $23 122 (according to Binance).

The value of the second most capitalized cryptocurrency, Ethereum, has declined 3,52% over the past seven days to $1666. The native token of the cryptocurrency exchange Binance (BNB) has increased by 9,76% and is trading at $318.

The total capitalization of the crypto market dropped from $1,141 trillion to $1,108 trillion for the week, with bitcoin dominating 39,22%. Ethereum's share is 17,56%.

Hacking Solana, Nomad and ZB

Several major attacks on crypto projects have taken place at once this week. On August 3, analytics company PeckShield reported on the hack of Asian cryptocurrency exchange ZB. Hackers managed to gain access to the platform's hot wallet. Preliminary damage is estimated at $4,8 million. Prior to the hack, the exchange ranked 22nd on CoinMarketCap, then moved to 29th.

Solana's blockchain also suffered a major attack in which hackers withdrew more than $7 million in cryptocurrency from users' wallets. It was perpetrated by a massive exploit and compromise of the private keys of hot wallets. The Phantom, Trust Wallet and Slope wallets, which had remained inactive for more than 6 months, were affected the most. More than 8 000 addresses were compromised.

Solana developers linked the incident to the Slope provider. The project team confirmed the compromise, noting that they are working with Solana to find other possible vulnerabilities. They gave information about the hack to law enforcement. Slope urged users to create new wallets with other seed phrases and transfer all assets to them.

On August 2, the crosschain protocol Nomad lost nearly all of its funds as a result of an exploit. More than $190,3 million in cryptocurrency was withdrawn from the bridge; after the hack, the total value locked (TVL) was $10 937. White hackers later returned about $9 million to the protocol; during the exploit, they managed to withdraw some assets to protect them from theft.

According to analyst firm Chainalysis, there have been 13 attacks on crosschain protocols since the beginning of the year, with a total of $2 billion stolen by hackers. These hacks accounted for 69% of all exploits in 2022. Experts noted that cross-network bridge vulnerabilities are becoming a major threat to security as well as user confidence in blockchain technology.

SEC investigation against all cryptocurrency exchanges in the US

The US Securities and Exchange Commission (SEC) intends to investigate all cryptocurrency exchanges that operate in the United States. The regulator is targeting, among others, the US division of Binance.

The SEC wants to resolve a dispute with the US Commodity Futures Trading Commission (CFTC) over the right to regulate the crypto market. If the situation is not resolved within the agencies, Congress will intervene and, according to the source, is likely to side with the CFTC. Earlier, SEC chief Gary Gensler said that most crypto assets fit the definition of securities and should be regulated by his agency. He then instructed staff to work directly with exchanges to register them with the SEC.

Senators Debbie Stabenow and John Boozman, as well as Cynthia Lummis and Kirsten Gillibrand, introduced two different crypto-regulation bills, both proposing the CFTC as the supervisory agency.

Restrictions on cash payments in Israel

On August 1, a law went into effect in Israel that prohibits payments of large sums in cash and bank checks. Transactions exceeding 6000 Israeli shekels (~$1780) must be paid by digital transfer or debit card.

According to the Israel Tax Authority (ITA), this is needed to combat illegal activity and encourage digital payments. ITA explained that the limitation on cash transactions is intended “to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash.”

Delisting tokens from Binance

Binance announced the delisting of seven digital assets from the platform: EasiFi, QuantStamp, Bread, Nexus, Navcoin, Moeda Loyalty Points and Spartan Protocol. The following trading pairs will also be removed: EZ/BTC, EZ/ETH, QSP/BTC, BRD/BTC, BRD/ETH, NXS/BTC, NAV/BTC, MDA/BTC and SPARTA/BNB. On August 11 at 9:00 UTC trading will stop, on August 12 from 00:00 UTC input function will be unavailable. Coin withdrawals from the platform will be possible until November 12, 00:00 UTC.

In addition, the US division of Binance announced the delisting of the Amp token (AMP) due to the fact that the SEC equated it to securities. Deposits on AMP will be suspended on August 16 at 2:00 UTC, and the AMP/USD trading pair will be removed at 4:00 UTC. Binance.US may return the token if the SEC changes its decision.

News of the metaverses

Tinder, a mobile dating app, postponed its plans to create a metaverse and the full launch of Tinder Coins cryptocurrency due to poor financial results in the last quarter. Tinder users were supposed to be able to meet and interact in a virtual space. Tinder Coins, which could be bought or received for being active, were supposed to be used to pay for premium features. The company said it would continue to develop the trend “at the appropriate time when we have more clarity on the overall opportunity and feel we have a service that is well-positioned to succeed.”

On September 1, the Hong Kong University of Science and Technology will launch MetaHKUST, a virtual campus. The initiative aims to organize joint training of students from different cities in a single virtual space. To create a unified virtual environment, the university will equip the Guangzhou and Hong Kong campuses with sensors, cameras, and visualization tools to create virtual twins of the offline campuses. After the ecosystem is in place, both institutions will be able to create content in the form of avatars, NFTs, tokens, or virtual art objects.

Ethereum co-founder Vitalik Buterin said that the concept of the metaverse can be implemented, but existing attempts by corporations to create a virtual world are going anywhere. He added that right now we do not even know a definition of the metaverse, and it is too early to talk about what people really want from it. That is how Buterin responded to developer Dean Eigenmann. The latter wrote that the metaverse makes sense, but is unlikely to be realized with the tools venture capitalists are investing in now. “Most of these VCs have never played a video game and it shows,” Eigenmann concluded.

CBDC news

The Bank of Japan abandoned plans to issue a digital yen due to lack of public interest. According to the regulator, most citizens prefer to use private banks and digital payment systems because of inexpensive services and additional bonuses such as cashback. Acceptance of cryptocurrencies in Japan remains low, and cash is still the primary method of payment, as one-third of the country's population is over the age of 65.

Mastercard Chief Financial Officer Sachin Mehra said that cryptocurrency is too volatile to be classified as a payment instrument. He explained that central bank digital currencies (CBDC) and stablecoins are more suitable as a medium of exchange. However, Mehra added that cryptocurrencies have a great future and will help the world in the transition from cash to electronic payment methods.

NFT news

On August 26, British rock band Muse will release their ninth studio album “Will of the People” in the form of NFTs on the Serenade platform, created on the Polygon sidechain. The release is limited to 1 000 copies and will also be released in classic format. With the purchase of the album, fans will receive a downloadable version in FLAC extension with digital signatures of the band members. It will be the first NFT release to hit the UK and Australian music charts.

Miami Mayor Francis Suarez announced the release of 5 000 NFTs in partnership with TIME magazine, Mastercard and CRM solutions developer Salesforce. The city's tokens will be created by local artists, and holders will have access to Mastercard's Priceless Miami program, with a variety of events and tours planned.

Jewelry brand Tiffany & Co. announced the sale of pendants for NFT holders from the CryptoPunks collection. The company will issue 250 NFTiff passes that can be exchanged for gold and gemstone pieces that replicate the tokens of the popular collection. Each customer can purchase a maximum of 3 NFTiff. Amid this news, CryptoPunks daily trading volume increased by 1847%.

Binance launched ticket sales in the form of NFTs for Italian FC Lazio's matches in the 2022/23 season. In addition to access to the stadium, ticket holders will benefit from numerous discounts, including 10% off any Lazio merchandise on sale and 20% off tickets to the club's Europa League matches.

New predictions for the bitcoin exchange rate

Analyst at investment firm ARK Invest Yassine Elmandjra allowed a significant rise in the bitcoin rate. He noted that the asset recovered to the 200-week moving average (200WMA) after breaking through it for just the seventh time in the history of price monitoring. The analyst said that according to historical data, one year after reaching the 200WMA, bitcoin’s price increased by an average of 240%. If the asset solidifies above this figure, one can expect its value to rise.

Anthony Scaramucci, the head of investment firm SkyBridge Capital, said that the worst part of the bear market is over. He believes bitcoin is unlikely to fall below the $17 500 low it has already reached in this cycle. Based on the adoption of the first cryptocurrency and the growth of addresses, Scaramucci concluded that the fair market value of the asset is around $40 000.

Crypto trader and investor Bob Loukas said that the digital asset market could plunge into a “true bear phase” in 2026. According to the investor, the impetus for trend formation in the market comes from halvings. Loukas believes bitcoin will update its all-time high (ATH) before transitioning to a possible crypto winter.

High inflation and fear of recession will drive bitcoin adoption, said Changpeng Zhao, head of Binance. He noted that at the moment bitcoin bulls defending the “20Kish” line. Zhao added that the fall of the first cryptocurrency below an all-time high was due to the collapse of the Terra ecosystem and the sale of 75% of bitcoin reserves by Tesla.

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Author:

Michael Golikov Michael Golikov

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