Possible ‘white hat hacker’ exploits THORchain for $8M, proposes 10% bounty

The white-hat hacker claims to have mercifully minimized the damage of their $8 million exploit in a bid to teach THORChain a lesson.

Cross-chain decentralized exchange THORChain has suffered its second multi-million-dollar hack in as many weeks, with $8 million worth of Ether impacted.

However, the attack appears to have been carried out by a white-hat hacker, with THORChain announcing the perpetrator had requested a 10% bounty. ETH will be halted until the code has been audited.

Liquidity providers impacted by the exploit will be subsidized using the project’s treasury funds

The exchange — which is still in the middle of a staged beta launch called Chaosnet — conceded that the “complexity” of its state machine comprises THORChain’s “Archille’s heel,” however asserted that its issues “can be solved with more eyes on, as well as a re-think in developer procedures and peer-review.”

A screenshot shared from the project’s Discord forum appears to show a message forwarded to the project by the hack via transaction data.

The hacker claims they deliberately minimized the damage from the exploit in a bid to teach THORChain a lesson, stating: “Do not rush code that controls 9 figures,” and “Disable until audits are complete.”

The hacker adds that they could have stolen Ether, Bitcoin, Binance Coin, Lycancoin, and many BEP-20 tokens if they had wanted to, asserting that “multiple critical issues” were found and that a 10% bug bounty could have prevented the incident.

On July 16, Cointelegraph reported that THORChain had been halted after 4,000 Ether worth $7.6 million was drained from the protocol. The protocol unsuccessfully proposed a bug bounty to the hacker in exchange for returning the stolen funds.

Related: ChainSwap announces compensation and ‘deep audit’ plan after $8M exploit

The decentralized exchange also lost $140,000 in a separate exploit suffered last month.

THORChain entered into its guarded “Chaosnet” launch in April, enabling cross-chain swaps across the Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Binance Chain networks.

‘Ethereum Improvement Proposal 3675’ for the Eth2 merge launches on Github

The coming Eth2 Proof-of-Stake chain merge now has an Ethereum Improvement Proposal.

A formal Ethereum Improvement Proposal has been created for the network’s forthcoming chain merge, bringing Ethereum one step closer to realizing its highly anticipated Proof-of-Stake (PoS) transition.

On July 22, ConsenSys researcher Mikhail Kalinin created a pull-request for EIP-3675 on Github, formalizing the chain merge as an improvement proposal for the first time. The EIP has also been slated for discussion during the July 23 Ethereum Core Devs Meeting by developer Tim Beiko.

The proposal would merge the Ethereum and Eth2 chains, transitioning the network’s consensus mechanism away from Proof-of-Work and empowering stakers to validate transactions.

The EIP notes that no “safety nor liveness failures were detected” since the launch of Eth2’s beacon chain in December 2020, adding:

“The long period of running without failures demonstrates the sustainability of the beacon chain system and witnesses its readiness to start driving and become a security provider for the Ethereum Mainnet.”

Despite the EIP, many leading figures in the Ethereum community, including lead developer Vitalik Buterin, believe it is very unlikely the chain merge will occur during 2021.

The EIP comes amid bidding for the EIP-1559 Supporter NFT series which was launched via Mirror on July 21. The nonfungible tokens demonstrate support for the introduction of a burn mechanism to Ethereum’s fee market as part of the network’s coming London upgrades. All proceeds will be shared among 1559's contributors, and the tokens were designed by artist "Kitteh."

Since the launch of the beacon chain in December, Eth2 has emerged as the second-largest PoS network by staked capitalization in USD terms, with $12.7 billion worth of Ether locked in staking despite less than 6% of its circulating supply having been deposited.

According to Staking Rewards, Cardano has the largest staked capitalization with $24.2 billion and 62% of supply locked. Solana ranks third with $10.2 billion from 74%, followed by Polkadot with $9 billion from 63%.

Vitalik Buterin’s surprise cameo in Ashton Kutcher and Mila Kunis’ living room

Ashton Kutcher has uploaded a video featuring Vitalik Buterin explaining Ethereum from his lounge room.

Actor and venture capitalist, Ashton Kutcher, has published a video to Twitter featuring himself, his wife Mila Kunis, and Ethereum founder Vitalik Buterin, to explain the project to newcomers

For the first minute, the video shows Kutcher quizzing Kunis on basic terms relating to cryptocurrency and blockchain technology in a living area of their home.

After Kunis offers simple one-sentence definitions to explain “crypto,” “blockchain,” and “decentralization,” Kutcher asks for a description of Ethereum. The camera then pans to the right, moving past Kunis to reveal Buterin seated at a table.

Buterin launches into a lengthy explanation of Ethereum’s fundamental components, articulating how the smart contract protocol differs from “single-purpose” chains, citing Bitcoin as an example of such.

“Ethereum is a general-purpose blockchain [...] an open platform that allows people to build their own applications on top, and anything built on top of Ethereum is protected and secured [...] by an entire network of thousands of computers around the world,” Buterin says.

“Because [Ethereum] supports a programming language, developers have this unlimited creativity in what kinds of things that they actually create on Ethereum. So you can use Ethereum to create cryptocurrencies, or NFTs, or many other kinds of things.”

Kutcher responded: “Yeah, that makes sense.”

The links and hashtags accompanying the video suggest it was created to promote Kunis’ “Stoner Cats” series of nonfungible tokens. People who buy a Stoner Cats NFT also receive access to stream episodes of Kunis’ animated series by the same name. It bills itself as “The first NFT animated series.”

Promotional image for Stoner Cats

Related: Calling the crypto space 'a very masculine area,' Mila Kunis launches NFT project

Kutcher is no stranger to NFTs, having tokenized a notepad scribbling in August 2020, with the physical original being incinerated before the token was put up for auction.

His venture capital firm, A-Grade Investments, has also backed top firms in the crypto space, including payment processor BitPay in 2013 and blockchain security company BitGo in 2014.

60% of uber-rich family offices considering crypto or own it: Goldman Sachs

15% of Goldman Sachs’ family office clients have already purchased digital assets.

A survey conducted by major investment bank Goldman Sachs has found that close to half of its family office clients want to add cryptocurrency to their portfolios, signaling the ultra-wealthy are becoming increasingly bullish on digital assets.

The survey, reported by Bloomberg, queried more than 150 family offices worldwide and found that 15% are already exposed to crypto assets.

A further 45% of offices expressed interest in investing in the asset class as a hedge against “higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus.”

However other respondents cited concerns regarding the volatility and long-term uncertainty surrounding the price of cryptocurrencies as reasoning for their aversion to the asset class.

Approximately 67% of the firms surveyed manage more than $1 billion worth of assets, with 22% of respondents boasting assets under management exceeding $5 billion.

Bloomberg describes the business of family offices as managing “the wealth and personal affairs of rich people,” including the likes of Microsoft co-founder Bill Gates, former Google CEO Eric Schmidt, and Chanel owners Alain and Gerard Wertheimer.

Related: Billionaire SBF says FTX may one day buy Goldman Sachs and CME

Professional services firm Ernst & Young estimates there are more than 10,000 family offices that each manages the financial affairs of only a single family, half of which were launched during the 21st century. The family office sector is estimated to manage more than $6 trillion globally, overshadowing the hedge fund industry.

Goldman Sachs’ Meena Flynn asserts that most of the firm’s family office clients have expressed an interest in the “digital asset ecosystem,” adding that many customers believe blockchain technology “is going to be as impactful as the internet has been from an efficiency and productivity perspective.”

Ethereum must innovate beyond just DApps for DeFi degens: Vitalik Buterin

As second layer scaling matures for Ethereum, Vitalik Buterin urges the community to grow beyond the confines of DeFi.

During his keynote at the EthCC conference in Paris, Ethereum co-founder and lead developer Vitalik Buterin implored the Ethereum community to innovate beyond the confines of decentralized finance.

Describing non-financial utilities as “the most interesting part of the vision of general-purpose blockchains,” Buterin lamented that financial applications currently “dominate the Ethereum space.”

“Being defined by DeFi is better than being defined by nothing. But it needs to go further.”

Buterin outlines several non-financial applications for Ethereum, including decentralized social media, identity verification and attestation, and retroactive public goods funding.

“Moving beyond DeFi is not about being against DeFi. I actually think [...] the most interesting Ethereum applications are going to combine elements of finance and non-finance,” said Buterin.

“Maybe a few years from now we’ll have a lot of really exciting things [...] that are just providing all kind of very diverse and real value to all kinds of people, not just within the Ethereum ecosystem, but also going far beyond it as well,” he added.

Buterin has already begun work on public goods funding. In a July 21 blog post co-authored by Buterin, layer-two scaling solution, Optimism, pledged to fund open source development through a retroactive rewards protocol, with Optimism committing all profits generated through sequencing to the initiative.

Why DeFi?

Buterin attributes the Ethereum community’s preoccupation with DeFi to two main factors.

Firstly, Vitalik asserted that “finance is just the area where centralized technology sucks the most,” concluding that finance offers a larger domain for decentralization than other centralized industries:

“I can send you a centralized email and you will get it within one second. And sure, maybe various intelligence agencies will read it, but at least you could read it and at least you can read it one second from now. International bank wires do not work that way.”

Buterin also emphasized the prevalence of high fees in pushing the sector toward financial applications, noting:

“The degens can pay for it, the apes can pay for it, the orangutans can pay for it. But if we start talking about a decentralized social media, where every tweet becomes an NFT, then that can’t work if you have $5.22 transaction fees.”

However, Buterin offered that the challenge of high transaction fees “is now being solved” by Ethereum’s growing ecosystem of layer-two networks.

Related: Bitcoin falls to sixth for daily revenue, with just 12% of Ethereum’s fees

With work to mitigate transaction costs on Ethereum currently underway, Buterin asserts that now is the time to begin exploring how Ethereum can be used to tackle other issues, stating: “the Ethereum ecosystem has to expand beyond just making tokens that help with trading other tokens.”

“If you just take this narrow thing that is DeFi, and you keep pushing it to infinity [...] you’re just gonna get tokens that give you profit from yield farming other currencies that are financial derivatives between other yield farming tokens,” he said.

Despite noting that financial derivatives offer some value to the sector, Buterin warned of the systemic risk associated with complex derivative products, concluding: “Let’s not just do DeFi.”

“These things are valuable up to layer-one and layer-two, [...] but once you get to layer-six, you’re actually increasing the financial instability and the risk this whole thing is going to collapse.”

Chainlink onboards an average of 1.4 new partners each day in 2021

Chainlink is onboarding new partners twice as fast in 2021 compared to 2020.

Leading oracle provider, Chainlink, has onboarded partner integrations at a rate of more than 1.4 daily during 2021 so far.

According to the archives of Chainlink’s ecosystem portal, 281 different crypto projects have announced integrations during 2021 so far, with the calendar currently 201 days into the year.

With all time third-party Chainlink integrations currently totaling 650, that means 43% of the project’s partners were onboarded this year. By contrast, roughly 250 partners integrated with Chainlink during all of 2020.

While many of Chainlink’s partners are little-known projects in their nascent stages, some of the crypto sector’s leading players have recently teamed up with the oracle provider, including Huobi’s ECO Chain, the Hedera Governing Council, and Alchemix.

An increasing number of projects are also utilizing Chainlink’s Verifiable Random Function (VRF), which offers decentralized applications a secure and automated solution for generating randomization.

Related: Chainlink integration means metaverse can truly reflect the real world

For example, blockchain-powered game Infinity Skies announced it had teamed up with Chainlink on July 20 to distribute its in-game “loot” in a fair manner.

“Since loot is probabilistic and NFTs hold real value to players, it is imperative that the minting of loot cannot be ‘gamed’,” Infinity Skies stated.

“Chainlink VRF provides the Infinity Skies’ smart-contract responsible for chest opening with direct access to a tamper-proof and auditable random number to determine outcomes when opening chests.”

Crypto developers have come up with a wide array of novel applications for Chainlink’s VRF functionality, with PancakeSwap also integrating VRF for its decentralized lottery application last week. Other projects are using VRF to ensure prizes and rewards are issued in a verifiably fair fashion. 

MakerDAO to dissolve Foundation and become truly decentralized again

MakerDAO plans to complete its roadmap to decentralized governance with the dissolution of its foundation in the coming months.

Pioneering decentralized finance protocol, MakerDAO, has announced its foundation will formally dissolve in the coming months, marking one of the final milestones in the protocol’s roadmap to decentralized governance.

A July 20 blog post describes Maker’s decentralized autonomous organization, or DAO, as now being “fully self-sufficient” — with its globally distributed community “now responsible for every aspect of the Maker protocol.”

“Complete decentralization of Maker means that future development and operation of the Protocol and the DAO will be determined by thousands or perhaps millions of engaged, enthusiastic community members, all determined to extend the benefits of digital currency to people across the globe.”

The post’s author, Maker Foundation CEO, Rune Christensen recounts highlights from the project’s six-year journey, with Christensen having first revealed his plans in a Reddit post detailing his vision for an Ethereum-back stable token dubbed “eDollar” during March 2015.

The Maker Foundation was created as a non-profit tasked with overseeing the project's development and funding in September 2018, reportedly at the behest of its early investors. While Christensen created the Foundation with the intention of dissolving it within two to three years, the move catalyzed internal tensions between supporters of the Foundation and those who saw the legal entity as at odds with crypto’s fundamentally anarchic ethos.

He describes Maker as having “come a long way in a relatively short period,” transitioning from a pioneering fledgling DAO, into a Foundation, and back to a DAO again.

“While the Foundation played a specific and important role in the further development of the Maker Protocol and the growth of a global team, it was designed to exist only temporarily,” emphasized Christensen.

In May 2017, more than two years after Christensen revealed Maker on Reddit, the protocol conducted a limited release of ProtoSai — the precursor to Maker’s first stablecoin, SAI, or Single-Collateral Dai.

SAI would enjoy a wholesale release in December of 2017 and circulate for nearly two years, with Maker introducing Multi-Collateral Dai (DAI) during November of 2019 — allowing DAI to be minted against a variety of digital assets approved by Maker governance.

Related: Australian digital finance industry wants to legally recognize DAOs

While Maker would emerge as a pioneering DeFi protocol perched at the top of the sector’s rankings by total value locked, 2020 was not all smooth sailing for Maker, with users launching a class-action lawsuit against the foundation in the aftermath of “Black Thursday” in March. The incident saw Maker lose roughly $6.64 million DAI to cascading liquidations after the price of Ether crashed 50% over roughly 24 hours.

March 2020 would also see the Maker Foundation transfer the MKR token contract to community governance, marking the beginnings of the project’s journey to reinstating decentralizing governance — with Christensen characterizing the foundation as “completely pointless.”

The protocol would also add support for Circle’s centralized stablecoin USDC that month, inflaming controversy regarding Maker’s support for centralized crypto assets as collateral for its purported decentralized stable token.

In March of this year, “Core Units” were established to coordinate management across the protocol’s various teams and activities. The foundation would also return development funds of 84,000 MKR to the Maker DAO in May, worth nearly $500 million at the time.

According to DeFi Llama, MakerDAO is currently the sixth-ranked decentralized finance protocol with a total value locked of $5.62 billion.

Bitcoin falls to sixth for daily revenue, with just 12% of Ethereum’s fees

Ethereum, Uniswap, Binance Smart Chain, and Aave are all beating out Bitcoin by daily fee revenue.

Ethereum appears to be extending its fee dominance over Bitcoin by roughly 10 times, with Bitcoin currently ranking just sixth by weekly fee generation.

According to CryptoFees’ data for July 18, the Bitcoin network had generated $725.7 million in daily fees on average over the past seven days, and less than $400,000 worth of fees for the day.

Ethereum tops the rankings by far, generating more than $6.1 million in daily fees on average for the week, and more than $5 million for the day. As such, Ethereum’s daily fees beat out Bitcoin’s by 8.4 times for the past week, and by more than 15 times for July 18.

Uniswap V3 ranked second with an average of $1.5 million in daily fees, followed by Binance Smart Chain with $1.2 million, Uniswap V2 with $732,000, Aave with $728,000, and then Bitcoin.

Twitter user “odin free” tweeted the findings, likening Ethereum’s network strength relative to Bitcoin to Facebook’s rise to dominance over Myspace during the late 2000s.

Bitcoin’s slide down the fee rankings comes as Ethereum’s forthcoming London upgrades spark renewed speculation whether the leading crypto asset by market cap will be flipped amid the Eth2 rollout.

Related: Ether already ‘flippening’ Bitcoin, says Celsius CEO

On July 14, crypto analyst Lark Davis tweeted data indicating that Ethereum’s daily on-chain settlement value is trending at triple that of Bitcoin. Davis noted the increasing popularity of layer-two scaling solutions for Ethereum is likely to increase the disparity.

“I highly suspect this gap will increase now that we have layer twos like Optimism coming online,” he said.

Ethereum is also beating out Bitcoin by total transaction count by roughly 500%, and has enjoyed brief stints leading BItcoin by transaction volume, trading volume, and node count over recent months.

Bitcoin falls to sixth for daily revenue, with just 12% of Ethereum’s fees

Ethereum, Uniswap, Binance Smart Chain, and Aave are all beating out Bitcoin by daily fee revenue.

Ethereum appears to be extending its fee dominance over Bitcoin by roughly 10 times, with Bitcoin currently ranking just sixth by weekly fee generation.

According to CryptoFees’ data for July 18, the Bitcoin network had generated $725.7 million in daily fees on average over the past seven days, and less than $400,000 worth of fees for the day.

Ethereum tops the rankings by far, generating more than $6.1 million in daily fees on average for the week, and more than $5 million for the day. As such, Ethereum’s daily fees beat out Bitcoin’s by 8.4 times for the past week, and by more than 15 times for July 18.

Uniswap V3 ranked second with an average of $1.5 million in daily fees, followed by Binance Smart Chain with $1.2 million, Uniswap V2 with $732,000, Aave with $728,000, and then Bitcoin.

Twitter user “odin free” tweeted the findings, likening Ethereum’s network strength relative to Bitcoin to Facebook’s rise to dominance over Myspace during the late 2000s.

Bitcoin’s slide down the fee rankings comes as Ethereum’s forthcoming London upgrades spark renewed speculation whether the leading crypto asset by market cap will be flipped amid the Eth2 rollout.

Related: Ether already ‘flippening’ Bitcoin, says Celsius CEO

On July 14, crypto analyst Lark Davis tweeted data indicating that Ethereum’s daily on-chain settlement value is trending at triple that of Bitcoin. Davis noted the increasing popularity of layer-two scaling solutions for Ethereum is likely to increase the disparity.

“I highly suspect this gap will increase now that we have layer twos like Optimism coming online,” he said.

Ethereum is also beating out Bitcoin by total transaction count by roughly 500%, and has enjoyed brief stints leading BItcoin by transaction volume, trading volume, and node count over recent months.

Chinese artist showcases NFT real estate at Alibaba-sponsored innovation festival

NFT artworks depicting “socialist cyberpunk” housing are being showcased at the Taobao Maker Festival in Shanghai.

This year’s Taobao Maker Festival — an annual event celebrating Chinese art and entrepreneurship hosted by the Alibaba-owned e-commerce platform Taobao — will showcase nonfungible tokens (NFTs) for the first time.

This year’s event will see decentralized application platform Near Protocol team up with blockchain gaming firm Web3Games and Chinese artist Huang Heshan to sell NFT-based real estate created by Huang.

Heshan’s virtual “Bu Tu Garden” will be available for purchase during the event, with the garden comprising more than 1,000 virtual structures, including ten “luxury single-family villas,” 300 high-end units, and 1,000 “umbrella” parasols.

Bu Tu Garden forms part of Heshan’s first NFT collection, “Toorich City Series” — which is built around a fictional real-estate tycoon, Mr. Toorich, who is dedicated to building up-market housing for the economically disadvantaged.

The Bu Tu Garden NFTs can be purchased using Chinese renminbi via Taobao’s website. The tokens must be claimed with a Near wallet.

The Taobao Maker Festival was first held in 2016, with this year’s event taking place in Shanghai’s National Exhibition and Convention Center from July 17 through July 25.

Speaking to Blockcast, Heshan recounted his surprised with the ease of working with nonfungible tokens, stating: "I originally thought that the concepts of blockchain and NFT would be very complicated.”

The self-described “socialist cyberpunk” also emphasized the reduced costs of minting NFTs on Near when compared to Ethereum, stating: “The cost of casting an NFT on Ethereum is hundreds or thousands of dollars too expensive. NEAR only costs a few cents and is very suitable.”

Related: Virtual land can be worth more than the real thing after plot sells for record $1.5M

While Heshan’s digital real estate NFTs are purely artistic works, crypto-powered virtual real estate has seen significant growth over roughly the past year, with a digital land plot within blockchain game Decentraland selling for more than $900,000 last month.

Last week, Cointelegraph reported that Illuvium co-founder Kieran Warwick had flipped a virtual land plot he purchased last year in Axie Infinity for a profit of more than 9,000%.

Master-pieces: Swiss bank issuing NFT shares in Picasso painting for $6K each

Swiss digital asset bank Sygnum is issuing NFTs representing fractionalized ownership in a Picasso painting.

Digital asset-focused Swiss Bank, Sygnum, has teamed up with art investment firm Artemundi to offer fractionalized ownership shares in a Pablo Picasso painting for $6,000 each.

Shares representing ownership over $3.68 million Picasso painting, “Fillette au béret,” will be tokenized and issued via blockchain technology, allowing a wide variety of investors to gain exposure to the artwork.

The nonfungible tokens (NFTs) can be exclusively purchased by sophisticated and institutional investors through Sygnum Bank, with secondary trade set to take place on SygnEx — the bank’s digital asset trading platform.

Trades will be settled in Swiss Francs (CHF) using Sygnum’s native CHF stablecoin, DCHF. Fractionalized ownership over the painting will be recognized by Swiss law.

The 1964 painting depicts a beret-capped child in brightly coloured clothes, and was last sold for $2.48 million in 2016. The physical painting will not be sold, with the artwork slated to remain at a high-security facility when it is not being loaned to museums for exhibition.

Artemundi co-owner, Javier Lumbreras, emphasized the revolutionary utility offered by fractionalized ownership through NFTs stating:

“Artistic, cultural objects of universal appeal, once reserved for an elite group of collectors or the museums, can now be safely and directly owned without the burden of high entry barriers.”

“The art market is absurdly opaque and inefficient, but these traits will soon be relics of a bygone age," he added.

Picasso on the blockchain

Sygnum is not the first company looking to tokenize the work of Picasso.

In June, Soethby’s auction house announced it had teamed up with Mira Imaging with plans to auction Picasso’s work “Le peintre et son modèle” alongside an Ethereum-based non-fungible token created by scanning “every micron” of the painting’s surface to create a “unique encrypted signature” representing the work.

Using a Looking Glass scanner, the NFT could be scanned to confirm the authenticity of the work. However, the NFT offering was scrapped by Sotehby’s, with the painting selling for $3.12 million without an nonfungible counterpart.

Related: Winner spends a fortune in crypto on Sotheby’s diamond auction

Last month also saw the launch of “The Burned Picasso” project from artist collective, Unique.One Community.

After displaying a Picasso sketch at a gallery in Denver, an NFT representing the artwork was minted at the end of the June, with the picture’s physical form getting incinerated.

The NFT auction will be live for the next two weeks, with a starting price set at 0.25 ETH (roughly $500). The auction winner will also receive the framed burnt remnants of original artwork.

In 2018, John McAfee teamed up with DLT platform Maecenas and crypto exchange Ethershift to auction an ERC-721 token representing ownership over a Picasso artwork.

Fillette au béret (Source: Artemundi)

ThorChain loses $7.6M in ‘Chaosnet’ exploit, offers hacker a bounty to return funds

The ThorChain network remains halted after the protocol suffered a hack in which the perpetrator is estimated to have made off with $7.6 million in crypto assets.

Popular cross-chain decentralized exchange, ThorChain, has suffered a multimillion-dollar breach.

Estimates as to the scale of the damage vary, with ThorChain revising the initial estimate that 13,000 ETH (worth $25.1 million) had been stolen down to 4,000 ETH (roughly $7.6 million) as a ballpark for damages.

In the ThorChain community Telegram channel, administrators have indicated the project has the funds needed to cover users’ stolen assets, but articulated a preference for the hacker to return the stolen funds in exchange for a bug bounty.

“While the treasury has the funds to cover the stolen amount, we request the attacker get in contact with the team to discuss return of funds and a bounty commensurate with the discovery,” a Telegram post stated, adding that user funds “will be available when the issue has been patched & the network resumes.”

ThorChain has since tweeted that its preliminary roadmap to recovery is underway, announcing that after the vulnerability is patched and the network restarted, Ether will be donated to liquidity provider pools to reimburse impacted users. From there, the team plans to engage security firms to have its contracts audited.

As of this writing, the ThorChain network remains halted.

Blockchain cybersecurity firm, Halborn Security, is compiling a proposal to the ThorChain community for “Advance Persistent Protection,” offering up a team of up to half a dozen “ethical security engineers working to break every update on ThorChain."

Related: A RUNE with a view: How smart crypto traders caught a 48% price pump

Thorchain entered into its guarded “Chaosnet” launch during April, facilitating cross-chain swaps across the Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Binance Chain networks.

DeFi Watch founder Chris Blec said the staged "raise the caps" launch of ThorChain had prevented an even greater loss of funds.

Today’s attack is not the first time ThorChain has been targeted by hackers during its Chaosnet deployment, with the protocol losing at least $140,000 worth of assets last month.

NFT game creator flips Axie Infinity virtual land for 9,200% gain in one year

Illuvium co-founder Kieran Warwick has sold a virtual land plot in Axie Infinity for $28,000 after purchasing it last year for $300.

Kieran Warwick, the co-founder of forthcoming NFT-powered gaming metaverse Illuvium, has revealed he made a gain of more than 9,000% from flipping a virtual plot of land purchased from the Axie Infinity metaverse.

Warwick, the brother of Synthetix founder Kain, recounts purchasing the plots during mid-2020, noting there “weren’t too many use cases” for digital land at the time, with in-metaverse advertising and  mining having yet to become common as utilities for virtual property.

He purchased the plot for $300, and announced the sale a year later for $28,000 on July 13.

Despite the lack of apparent utility, Warwick invested “quite a bit into” Axie Infinity based on “the promise for them to build out the metaverse.” While players are still waiting for Axie to build out functionality for its land, Kieran notes the plots have increased in value by thousands of percent over the past year.

“Basically it was speculation, I just thought that play-to-earn in itself, which is this new paradigm of gaming which is taking off now, is going to bring so many players to this game. No matter what, if I buy a rare plot of land, it's going to be worth some money,” he said.

Warwick has invested in digital land in four metaverse projects, but named only Axie Infinity and Mars.

“I want to have land in all of the different games that I think are [...] going to grow in the next few years.”

He likens his investment strategy to physical real estate, noting that investors look for new developments and other signs of growth when seeking to forecast whether property prices in a given suburb are likely to appreciate.

“It's the exact same principle in the metaverse,” said Warwick. “If you feel like there’s going to be popularity and there’s going to be other people building next to you [...] then it’s a no-brainer to buy these land plots. In almost every single case, they’re very rare.”

“If they mint 10,000 land plots, and then all of a sudden there’s a million players, you can see that the scarcity there is going to really create some allure.”

Land can be a productive asset

Beyond speculative buy-and-hodl plays, Warwick emphasizes virtual real estate investors can put their land to work, noting that many landowners within Decentraland host advertising on their plots in the game.

While he thinks “advertising opportunities are probably the biggest use case” at the moment, Warwick predicts the utilities for virtual land will be “endless” as metaverses grow.

Warwick also revealed that his own project will soon start selling land, emphasizing that Illuvium’s virtual plots will have “a use case from day one.”

He said that Illuvium will host a mini-game allowing virtual landowners to mine for an in-game mineral used to mint items within the game.

“You can only mine it if you have land, so immediately there’s a use case,” Warwick said, emphasizing he does not want the sole utility of Illuvium's real estate to be speculation: “just a stagnant thing where people buy, and it’s only important if someone else wants to buy it.”

‘DeFi Education Fund’ defends controversial $10.2M UNI liquidation

The DeFi Education Fund has defended its shock liquidation of $10 million in UNI, claiming the move was necessary to “begin its work and fund future operations.”

The DeFi Education Fund (DEF), an organization funded by Uniswap to spearhead lobbying and educational initiatives in support of the decentralized finance sector, has defended its sudden move to liquidate half of its UNI treasury earlier this week.

The organization said it needed to convert the funds into stable assets to weather crypto market volatility.

In May, the DEF was conceived in a Uniswap governance proposal from the Harvard Law Blockchain and Fintech Initiative, with the entity being formed earlier this month after the vote passed with a treasury of 1 million UNI tokens, worth more than $18 million at current prices.

Despite indicating the UNI would be sold over the course of years, on July 12, the fund suddenly announced it had organized for half of its war chest to be liquidated into USDC by market maker, Genesis Trading.

Adding to community concerns DEF committee member, Larry Sukernik liquidated Larry Sukernik liquidated 2,612 UNI (worth approximately $50,000) around the time of the fund’s $10 million sale.

Responding to widespread backlash from the crypto community, DEF published a blog on July 14 seeking to justify its large sell-off.

The organization said “the vast majority of DEF’s expenses will be dollar-denominated,” and that diversifying half of the funds into a stable asset “provides the DEF with a sustainable budget to weather any market downturns.”

Claiming that time is against the industry as regulators circle, DEF states it sold the UNI fund to “begin its work and fund future operations.”

The post also emphasizes the discretion over fund management afforded to DEF, quoting the Uniswap proposal as saying:

“Due to the dynamic and somewhat unpredictable state of global policy proposals, we believe the grant-making committee should have considerable discretion to allow for flexibility and speed.”

The foundation also rejects claims the sale had a significant impact on the UNI markets, asserting the sale represented less than 5% of daily UNI trade volume, and that UNI’s subsequent drawdown after the sale was in line with the broader crypto meta-trend.

In reference to concerns over Larrk Sukernik’s liquidation of UNI, a new policy means that DEF members will no longer be allowed to make UNI transactions within a seven-day window of DEF treasury activity in future. The post also emphasizes that Sukernik’s transaction occurred after the sale had already been completed.

Further, the DEF will hire a full-time policy director tasked with managing the organization’s annual budget, which is set to be published within the next 90 days. The organization also plans to use the Tally Failsafe tool, which will allow Uniswap governance to block transactions and revoke funds from the DEF. Failsafe is currently being audited.

Related: Uniswap v3 launches Optimistic Ethereum layer two scaling in alpha

The blog failed to placat DeFi Watch founder, Chris Blec, who responded on Twitter with a lengthy list of lingering concerns, including how the fund’s committee member were chosen and how UNI token holders can be assured funds will be appropriately disbursed in future.

Medium blogger ChainCatcher also emphasized the concentration of votes supporting the fund’s creation among Uniswap’s top backer, also noting it strange that only UNI holders should bear the expense of political lobbying for the broader political sector.

SEC fines Coinschedule $200K over sponsored, favorable ICO ratings

The SEC asserts that Coinschedule violated anti-touting provisions of U.S. securities laws.

The U.S. Securities and Exchange Commission has settled charges against the defunct initial coin offering (ICO) review website Coinschedule.com for violating the anti-touting provisions of federal securities laws.

But two SEC commissioners have penned an open letter in response saying the settlement highlights flaws with the commission’s processes.

According to a July 14 release from the securities regulator, Coinschedule failed to disclose it was receiving compensation from digital asset issuers for favorable reviews.

The settlement’s terms state that Blotics, formerly known as Coinschedule, must pay a penalty of $154,434 plus $43,000 in disgorgement plus interest without admitting or denying the SEC’s findings.

The website operated between 2016 and 2019, with many of its visitors hailing from the United States. The site provided “trust scores” for more than 2,500 ICOs, claiming to assess the “credibility” and “operational risk” of each offering using a “proprietary algorithm.” However, according to the SEC:

“In reality, the token issuers paid Coinschedule to profile their token offerings on Coinschedule.com, a fact that Coinschedule failed to disclose to visitors.” 

The SEC emphasizes that Coinschedule continued to publish ICO reviews after it published its 2017 DAO Report — which warned that ICOs may be securities, and as such, those who promote initial coin offerings must comply with federal securities laws.

Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, said taking money for favorable coverage of securities was prohibited: “The securities law prohibiting touting securities for compensation without appropriate disclosures to investors is clear and longstanding.”

Related: Rapper The Game facing $12M judgment along with execs in ICO case

However, not everyone at the SEC is happy with the case’s conclusion, with SEC commissioners Hester Peirce and Elad Roisman penning a letter criticizing the commission for failing to explain which specific digital assets touted by Coinschedule were actually securities.

The commissioners described the omission as “symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities.”

“There is a decided lack of clarity for market participants around the application of the securities laws to digital assets and their trading, as is evidenced by the requests each of us receives for clarity and the consistent outreach to the Commission staff for no-action and other relief.”

Judge scolds BitMEX lawsuit plaintiffs for offering him crypto ‘basics’ lessons

The judge urged the plaintiffs to “focus on the task at hand — convincing me that they have stated a plausible claim.”

The California District Judge overseeing a racketeering suit filed against crypto derivatives exchange BitMEX, William H. Orrick, has rebuffed the plaintiffs’ motion offering to provide them with a tutorial on “cryptocurrency basics.”

According to a July 13 report from Law360, the judge responded to Bitcoin Manipulation Abatement LLC (BMA)’s proposal with a one-page order on Tuesday, outlining the offer was “not well taken.”

“Plaintiffs believe that cryptocurrency tutorial will benefit the court. I think not,” Judge Orrick wrote, adding that the plaintiffs should “focus on the task at hand — convincing me that they have stated a plausible claim.”

BMA’s complaint was first filed in May 2020, just weeks after the firm filed lawsuits against Ripple and FTX. The suit against BitMEX is now in its fourth iteration.

The plaintiffs allege that BitMEX’s former parent company, HDR Global Trading Limited, and executives Arthur Hayes, Ben Delo, and Samuel Reed deliberately designed the exchange to “engage in, facilitate, aid, abet, counsel, induce and/or procure a myriad of illegal activities." BMA alleges BitMEX carried out racketeering, money laundering and wire fraud.

A previous version of the suit was dismissed without prejudice in March. BitMEX has staunchly rejected BMA’s claims.

The United States Department of Justice has accused Delo, Hayes, Reed and BitMEX head of business development Gregory Dwyer of violating the Bank Secrecy Act, having filed complaints against the group in October 2020.

Reed was arrested the same month, while Delo and Hayes voluntarily surrendered to authorities in March and April respectively, before being released on bail. The trio will face trial in March 2022, with Dwyer remaining at large.

ChainSwap announces compensation and ‘deep audit’ plan after $8M exploit

The project will airdrop governance tokens to holders according to balances prior to the hack.

Cross-chain asset bridge, ChainSwap, has announced a compensation plan for users after suffering an $8 million loss in its second exploit suffered this month. 

ChainSwap supports the Ethereum, Polygon and Binance Smart Chain networks.

On July 10, the hacker exploited a vulnerability allowing them to steal more than 20 different assets from the liquidity pools of partner exchanges. The incident has impacted the markets for numerous assets, with the tokens of Nord, Razor, Antimatter, and Ora among those taken by the attacker.

ChainSwap’s native token ASAP briefly fell more than 99% amid the incident. A separate hack on July 2 saw an attacker make off with roughly $800,000.

On July 14, ChainSwap expanded upon its plan to compensate impacted users through an airdrop based on their ASAP holdings prior to the hack, noting tokens held on the BSC and Huobi Eco Chain networks will be airdropped to the Ethereum mainnet.

ChainSwap stated that 717,200 ASAP (worth roughly $150,000) were liquidated from its treasury and allocated to compensate affected partner projects, in addition to stablecoins from its “team fund.”

The project also noted it was able to withdraw liquidity providers’ funds from Uniswap and force a burning of all hacked ASAP from the hacker’s wallet after halting its bridge. ChainSwap is in talks with various auditing firms to get a “deep audit” completed.

Additional code testing, bug bounty programs and third party auditing processes will be implemented for future software releases from the team.

Related: Your keys, his coins — Cryptopia employee admits to stealing $172K in crypto

NFT project Wilder World was among those seriously affected by the incident, with the attacker gaining the ability to mint 20 million of its native WILD tokens to their address. The tokens were promptly dumped in a single transaction for $207,000 worth of Wrapped Binance Coin, with the transaction briefly wiping more than 99% of the token’s value.

The attacker also stole roughly two million WILD from the ChainSwap bridge contract, which were sold for approximately $327,000 over nine transactions.

In April, ChainSwap closed a $3 million funding round that included participation from some of the sector’s top venture firms, including Alameda Research, NGC Ventures, and CMS Holdings.

Concern as Uniswap-backed ‘DeFi Education Fund’ dumps $10M worth of UNI

The recently formed DeFi Education Fund has come under fire for abruptly announcing it had liquidated half of the 1 million UNI tokens donated to it through UNI governance.

The controversial Uniswap-funded DeFi Education Fund has liquidated half of its donated funding into stablecoins, attracting condemnation from many in the crypto community.

On June 12, the fund tweeted that it was selling 500,000 UNI to Genesis Trading for 10.2 million USDC in an over-the-counter (OTC) trade, despite the Uniswap proposal for the fund indicating it would liquidate the 1 million UNI over four to five years.

In May, the student organization, Harvard Law Blockchain and Fintech Initiative, launched a governance proposal advocating for the creation of the fund and allocation of 1 million UNI (worth roughly $18 million at current prices) to the entity to support educational initiatives and policy lobbying for the decentralized finance sector.

At the start of this month, the proposal was passed and the UNI tokens were transferred to the fund.

The incident has reignited concerns regarding the centralization of Uniswap’s governance process, and called into question the transparency and motives of the fund.

Blockchain sleuths were able to identify that Larry Sukernik, one of the multi signers behind the education fund, had sold 2,612 UNI just a few hours prior to the OTC deal. On Twitter, Sukernik defended the trade, stating the UNI he sold was from a grant he'd only received a few weeks earlier.

Related: Cointelegraph Consulting: The race between Uniswap DEXs

Speaking to Cointelegraph, DeFi Watch founder, Chris Blec, emphasized that Harvard Law had made it clear “the intent was to to gradually sell the 1m UNI over a 4-5 year period, and not dump large amounts at once.”

“The Fund then just sold 50% of the 1m UNI for USDC without explanation. They still haven't explained why, despite hundreds of people asking them today,” he added.

On July 13, Blec posted a governance thread demanding transparency regarding the fund, expressing concerns regarding the voting process surrounding the proposal, the creation of the fund, and the possible role of Uniswap investor, Andresson Horowitz (a16z), in influencing the events.

“The DeFi Education Fund committee members, the Uniswap core team and its investors (including a16z) have refused to answer any specific questions posed to them about the fund’s origins, who came up with the idea, how future policy will be derived, and more,” Blec wrote, noting that a letter he sent to Andressen Horowitz had been “willfully ignored.”

“After the vote finished and the Fund was created, I sent a new set of questions on June 29 to a16z, as it appeared that the vote only won due to governance delegates using voting power given to them by a16z. These questions were also willfully ignored.”

Blec also called for Sukernik to stand down from the fund’s committee, telling Cointelegraph: “Even if it was unintentional, the appearance of a member of this committee selling UNI tokens from his own account just hours before triggering a massive 500K UNI sale is exactly the type of behavior that would trigger a regulator.” 

“It would send the right message if Sukernik resigned from the committee and allowed someone else to take his place.”

Hop Protocol launches USDC bridge between Ethereum, Polygon, and xDai

Hop plans to roll out support for additional crypto assets and layer-two networks in the coming weeks.

Hop Protocol, a team working on interoperability within Ethereum’s layer-two ecosystem, has launched its Hop bridge for the first time. 

A July 12 blog post notes the bridge has been launched with limited functionality, currently supporting “instant” USD Coin (USDC) transfers between the Ethereum mainnet, Polygon, and xDai Chain.

Hop plans to expand the number and assets it supports over “the next couple of weeks,” including crypto assets Ether, Matic, and Wrapped Bitcoin, stablecoins Dai and Tether, and forthcoming layer-two networks Optimism and Arbitrum.

The bridge locks up tokens that a user wishes to transfer between networks, issuing its own “hTokens” that can be quickly and cheaply transferred between layer-twos. The hTokens are destroyed on redemption. 

Hop will also launch a StableSwap automated market maker on each supported network to facilitate exchange between hTokens and their underlying assets, with Hop offering liquidity providers a 0.04% cut of all fees earned on transactions.

The StableSwap deployment on Polygon will also offer a liquidity mining program for USDC liquidity providers with more than $180,000 worth of MATIC slated for distribution.

While layer-two networks have emerged as the dominant scaling solution for Ethereum, the ecosystem has lacked the infrastructure facilitating the fast movement of assets between respective layer-twos.

Related: EY publishes an Ethereum scaling solution to the public domain

In March, Ethereum co-founder Vitalik Buterin revealed that sharding had been pushed behind the chain merge in the Eth2 roadmap amid the success of layer-twos, predicting that rollups will scale Ethereum by a factor of 100.

However, while Buterin had then predicted rollups would be launched within a few weeks, the Ethereum ecosystem still has not seen major rollups solutions launch to mainnet, with Optimism currently targeting July 26 for launch and Arbitrum yet to open up its guarded launch.

Woori becomes latest major Korean bank to announce crypto custody services

An increasing number of leading South Korean banks are establishing joint ventures with minor ownership to enter the crypto custody market while complying with local regulations.

According to a July 11 report from The Korean Economic Daily, the group’s banking unit, Woori Woori Financial Group has become the latest major South Korean financial institution to announce it will launch digital asset custody services.

Bank, is partnering with Bitcoin-based fintech solution firm, Coinplug, to establish a digital asset custody joint venture, dubbed D-Custody.

Coinplug will be D-Custody’s largest shareholder, followed by Woori Bank. The joint venture is expected to be incorporated in the coming weeks.

Existing Korean legislation maintains that domestic entities are not able to access the services of cryptocurrency exchanges, meaning the country’s banks can only enter the crypto market via joint ventures of share investments.

While local banks are prohibited from directly entering the digital asset custody market, an increasing number of major Korean financial institutions are setting up joint ventures with partial ownership to gain a foothold in the industry. A Woori Bank representative stated:

“In overseas markets, the digital asset custody has become a successful, established practice among the new services offered by the banks.”

As of August 2020, four of South Korea’s five largest banks had declared their intention to launch crypto custody services, including Kookmin Bank, Shinhan Bank, NH Nonghyup Bank, and Woori Bank.

Related: South Korea’s small crypto exchanges face increasing regulatory heat

Kookmin, the country’s largest financial institution, had filed for a trademark application for its custody service in March 2020, before establishing Korea Digital Asset Co. in partnership with venture fund Hashed and local blockchain service firm Haechi Labs in November.

In June 2020, Nonghyup Bank launched a blockchain financial services consortium in partnership with blockchain developer Hexlant, with the group announcing plans to launch a custody business alongside Korea Information & Communications Co.

In January 2021, Shinhan Bank announced it had made a strategic investment in the crypto custody consortium, Korea Digital Asset Trust, which is backed by major local exchange, Korbit.

Former pro sailer brokers tax-haven passports for wealthy crypto clients

Rich crypto investors are purchasing passports in tax havens for less than $200,000.

A Russian expatriate and former professional sailboat racer, Katie Ananina, Plan B Passport — a firm that brokers citizenship through investment schemes for tax-haven nations that don’t impose capital gains on crypto holdings to wealthy investors.

According to a July 11 report from CNBC, Plan B brokers hundreds of passports for predominantly western clients each year. Customers select from one of seven jurisdictions: Saint Kitts and Nevis, Antigua and Barbuda, Dominica, Vanuatu, Grenada, Saint Lucia, and Portugal.

“If the government starts affecting me, I will take all [my assets] into my hands and go elsewhere,” said Ananina, adding:

“I was smart enough to figure out that $200 in bitcoin will be worth $100,000 at some point. I don’t think the government should have 40% of that.”

The safe-haven states offer citizenship through investment schemes requiring six-figure investments into local businesses, real estate, or government bonds. Some jurisdictions accept payment as donations, with Ananina estimating most passports cost between $100,000 and $150,000.

“It’s basically a donation into the sustainable growth fund of the country. So, clients make a $100,000 or $150,000 donation, plus some due diligence fees, government fees, and then $20,000 for my legal fees,” she said.

Plan B’s clients will also incur exit taxes should they revoke their existing citizenship.

Ananina became a Bitcoin maximalist after witnessing a 50% crash in the price of Russian rubles while living in Spain and competing for Russia’s national sailing team in 2015.

“My macroeconomics professor wasn’t able to explain that to me. There was no chance I could run my equations and figure out what happened there. I realized I wasn’t happy with how money works.”

Related: 2020’s 5 countries friendliest to crypto and blockchain

Citizenship through investment schemes have come under increasing scrutiny recently, following a series of investigations by Al Jazeera that revealed wholesale corruption among the officials overseeing the programs in Cyprus and the Caribbean — with some Caribbean states being found to offer diplomatic passports for the right price.

Cyprus abolished its citizenship through investment scheme in October 2020.

Hydro plant from 1897 earns 3X as much mining BTC as selling power to the grid

An historic renewable energy facility in New York has tripled its profits by mining Bitcoin.

New York’s Mechanicville hydroelectric plant — one of the oldest hydropower generation facilities in the United States — is now host to Bitcoin mining.

The plant is owned by Albany Engineering Corp (AEC), which was asked to restore it by the National Grid in 1986. Jim Besha Sr., AEC’s chief executive, notes that cryptocurrency mining offers triple the profit margins available from selling electricity back to the grid:

“We think this is the oldest renewable energy facility in the world that’s still running. We can actually make more money with Bitcoin than selling the electricity to National Grid.”

Besha noted he is content to liquidate the BTC as it comes in, expressing skepticism regarding the crypto asset’s longer-term potential.

Despite the robust profit margins, Besha laments not selling his electricity to be used as power, but a decade of fighting with the National Grid has left him looking to alternative revenue streams.

When AEC was asked to restore the plant, a contract was signed with the National Grid guaranteeing it would purchase power from Besha for 40 years at a discounted rate. However, after AEC received licensing to operate independently in 1993, Besha claims the National Grid reneged on their deal, leading to a protracted legal battle.

After the facility incurred substantial damages from a flood, and later a generator catching fire, the National Grid agreed to give up the plant, pay for repairs, and purchase electricity from AEC at market value in 2003. Despite National Grid giving up its price discount, the profits from Bitcoin mining still dwarf what AEC can make by selling electricity.

Related: Bill banning crypto mining for 3 years dies in NY state assembly

AEC is not the first firm to repurpose a landmark of modern industry to generate cryptocurrency.

In 2018, Bitriver launched a data center in what used to be the world’s largest aluminum smelter in Siberia, which had been constructed by the USSR in the 1960s. The facility, which is now used to mine Bitcoin, is also situated near a major hydropower plant.

That same year, Coinmint announced it had signed a ten-year lease on a 1,300-acre plot of land in upstate New York that had once been used for aluminum smelting to host BTC mining hardware.

EU eyes new money laundering regulator and stricter crypto reporting requirements

The new Anti-Money Laundering Authority would comprise the “centerpiece” of a new supervisory system that would include national regulators.

The European Union is looking to launch a new agency designated with cracking down on money laundering at the regional level, with increased reporting requirements around crypto transactions listed among its principal objectives.

A July 8 report from Reuters citing leaked EU documents asserts the European Commission is proposing forming a new Anti-Money Laundering Authority (AMLA) that would act as the “centerpiece” of an oversight system also including national regulators.

The report also states that European lawmakers are drafting new requirements for virtual asset service providers (VASPs) mandating stringent data collection standards surrounding parties making cryptocurrency transfers. Data collected would also be made accessible to European regulators.

The report notes that crypto asset transfers are not currently under the scope of EU regulations surrounding financial services, stating:

“The lack of such rules leaves holders of crypto-assets exposed to money laundering and financing of terrorism risks, as flows of illicit money can be done through transfers of crypto-assets.”

The EU has come under pressure to strengthen its anti-money laundering guidelines after several member states launched investigations into Denmark’s largest bank, Danske Bank, over 200 billion euro worth of suspicious transactions that flowed through its small Estonian branch between 2007 and 2015.

In the absence of a supranational regulatory institution tasked with policing money laundering, the EU has historically had to rely on national authorities to enforce its policies.

“Money laundering, terrorist financing, and organized crime remain significant problems which should be addressed at Union level,” the documents stated.

“By directly supervising and taking decisions towards some of the riskiest cross-border financial sector obliged entities, the Authority will contribute directly to preventing incidents of money laundering/terrorist financing in the Union.”

SEC urged to crack down too

Europe isn’t alone in moving to crack down on crypto, with U.S. Senator Elizabeth Warren urging the Securities and Exchange Commission to crack down on the “highly opaque and volatile” digital asset markets on the same day.

Related: From mining to software: China's regulatory crackdown on crypto continues

“While demand for cryptocurrencies and the use of cryptocurrency exchanges have sky-rocketed, the lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters,” Warren said, adding:

“These regulatory gaps endanger consumers and investors and undermine the safety of our financial markets. The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps.”

The U.K. Financial Conduct Authority (FCA) has also sought to take action against major crypto exchange Binance in recent weeks, appearing to prompt a wave of local banks to stop processing payments to and from the platform.

Is ShibaSwap safe? DeFi Safety review gives it a score of just 3%

There are concerns over ShibaSwap's transparency and security.

Despite the immediate success of dog-themed decentralized exchange ShibaSwap, there are warnings  the DEX’s liquidity providers are throwing capital into an opaque protocol of questionable security.

Building on the popularity of their Dogecoin fork, Shiba Inu (SHIB), amid the Elon-Musk stoked dog-token trading frenzy, the coin’s developers launched their DEX with enticing yield incentives for liquidity providers on July 7.

Within 24 hours of launching, the protocol had amassed a Total Value Locked (TVL) of more than $1 billion.

On July 8, platform reviewer DeFi Safety published a report on ShibaSwap, scoring the protocol at just 3%, far below the 70% level the site considers a pass.

Describing the score as “a devastating fail,” DeFi Safety failed ShibaSwap on all but two of its 22 review criteria, with the protocol scoring 30% for the clarity of information provided in its whitepaper.

The review’s author is Rex Hygate, the founder of SecuEth and Caliburn Consulting. He highlighted ShibaSwap’s anonymous team, lack of transparency and documentation and pointed to the fact there is no public software repository, development history, or way to test the code.

On July 7, Solidity developer, Joseph Schiarizzi, posted an article warning that ShibaSwap’s staking contract had been under the control of just a single address for most of its first day of operation.

While ShibaSwap has since updated the contract to a multi-signature account requiring six of nine Safe Owners to agree on transactions before can be executed, Schiarizzi warns that each of the addresses may be under the control of a single entity:

“Multiple of these Safe Owners are new accounts with 0 transactions and no ETH, so they are most likely just place holders for the ShibaSwap devs who can agree easily to call any owner only function on the staking contract.” 

Schiarizzi emphasized the risks associated with the staking contract’s migrate function being under the control of a single entity, identifying that the contract owners “can simply deploy a new migrator contract which sends themselves all the LP tokens.”

DeFi Watch analyst Chris Blec shared Schiarizzi's warnings about ShibaSwap’s security risks to his 22,000 followers and highlighting the DeFi Safety review

SEC closes in on settlements with US BitConnect promoters for millions

Four of six U.S.-based promoters of the notorious BitConnect Ponzi scheme have reached settlement agreements with the SEC.

The U.S. Securities and Exchange Commission (SEC) is nearing settlements with four U.S.-based individuals accused of promoting the multi-billion dollar crypto Ponzi scheme, BitConnect.

According to Law360, the terms of the settlements are currently awaiting final approval from Judge John Koeltl. The judge noted that while agreements’ terms are currently legally sound, minor fixes are needed to be made to ensure they are “scrupulously accurate.”

The agreements include a more than $3 million settlement from Joshua Heppensen of Massachusetts and $576,000 from his fiancee Laura Mascola, $526,000 from Ryan Maasen of Oklahoma, and an unspecified amount from Michael Noble of California.

The SEC filed lawsuits against six of the scheme’s promoters in May of this year, alleging they offered and sold unregistered securities in the United States, including advertising BitConnect’s lending platform in testimonial-style videos. The two remaining defendants — Trevon Brown of South Carolina, and Craig Grant of Florida — are yet to agree to settlement terms with the SEC.

The Law360 report notes that throughout 2017, the company lured investors with promises of “no risk” returns, enticing them to pledge BTC used as collateral against which they could borrow and trade its native BitConnect Coin.

When the firm abruptly closed its lending platform in January 2018 after receiving cease and desist order from state regulators in North Carolina and Texas, investors were unable to redeem their BTC holdings, and were left holding the bag as BitConnect Coin rapidly crashed by more than 90%.

Related: The Most Famous Financial Pyramids in the Crypto World

BitConnect is among the largest Ponzi schemes to have infiltrated the crypto sector, having duped roughly $2.5 billion from thousands of investors over the span of one year.

The fall-out from the scam has been global in reach, with 52-year-old Australian promoter, John Louis Anthony Bigatton, facing six charges carrying penalties of between two and ten years for his role in the scheme.

DeFi aggregator Zerion snags $8.2M in Series A

Executives representing investors Mosaic Ventures and Placeholder have joined Zerion’s board of directors as part of the deal.

Ethereum-based DeFi aggregator, Zerion, has raised $8.2 million in a Series A funding round.

The non-custodial aggregation platform facilitates access to more than 60 Ethereum-based protocols, such as Aave, Yearn.finance, and Curve. Zerion has processed more than $600 million worth of volume in 2021 so far with a median trade of $1,000.

The raise was led by Mosaic Ventures, and also featured participation from Placeholder, Digital Currency Group, and Blockchain.com Ventures, among others.

Mosaic co-founder and partner, Toby Coppel, and venture partner at Placeholder, Brad Burnham, have joined Zerion’s board of directors as part of the round.

The company has now raised $10.2 million in total, building on its $2 million seed round in December 2019.

Zerion hopes the war chest can help its user base grow from roughly 200,000 to above seven figures. The project plans to expand its team from 18 to 25 before 2022, and revamp its trading interface and portfolio tracking feature.

Zerion is planning to enable support for other popular blockchains and layer-twos that are sufficiently popular among DeFi users during the third quarter. The team estimates its customers open their app nine times daily on average.

Related: DeFi aggregator raided by five hackers on launch day

The decentralized finance sector has exploded in popularity over the past year, with the total number of addresses that have interacted with DeFi protocols increasing from 25,000 to nearly 3 million in 12 months.

Despite DeFi tokens suffering massive drawdowns amid the recent crypto market crash, most of the sector’s leading projects have still gained by multiple factors since the start of the year.

In the past seven days DeFi tokens have surged with Aave (AAVE) up 25.4%, Synthetix (SNX)  increasing 46.4%, Uniswap (UNI) up 16.6% and Compound (COMP) up 29.2%.

Shiden secures third parachain slot on Kusama

The canary project of Polkadot-based multi-chain DApp hub Astar Network has won Kusama’s third parachain auction.

Shiden, the sister-project of leading Polkadot-native layer-two decentralized app hub, Astar Network (formerly Plasm Network), has won the third parachain auction for Polkadot’s experimental sister-network, Kusama.

Shiden secured the slot with a total of 137,020 KSM tokens bonded — worth nearly $29 million at current prices.

Shiden is a smart contract platform for Kusama-based DApps, offering multi-chain support for Ethereum Virtual Machine and WebAssembly-based contracts. The project also plans to deliver layer-two technology including Plasm and Optimistic rollups on Kusama.

Layer-twos have emerged as the dominant scaling solution for Ethereum, with co-founder Vitalik Buterin predicting rollups will scale the network by roughly 100 times and mitigate Ethereum’s scaling woes until sharding is introduced.

Parachain auctions allow projects to compete for one of Kusama’s 100 parachains, which are akin to sharded sidechains that interact with the network’s main “relay chain” to offer specialized execution and process transactions.

Auctions are conducted via a crowd loan, where projects’ followers agree to lock KSM toward their parachain bid in exchange for governance tokens.

Kusama’s parachains have so far gone to the canary networks of major Polkadot-based projects, with Acala Network’s Karura winning the first slot on June 22 with more than 500,000 KSM bonded — then valued at roughly $90 million. Moonriver won the second slot the following week with nearly 206,000 KSM bonded.

The coming parachain auction is expected to be closely contested, with Khala Network and Bifrost recently being separated by less than 3,000 KSM.

On June 29, Plasm rebranded to Astar Network, signifying the expansion of its focus from Polkadot-based layer-two technology to offer multi-chain support for EVM and WebAssembly.

Pundits say Bitcoin’s brutal quarter could see Tesla report up to a $100M loss for Q2

Analysts believe reporting requirements may compel Tesla to announce a paper-drawdown of between $25 million and $100 million on its $1.5 billion Bitcoin bet.

Bitcoin’s second-quarter price battering has pundits speculating that Tesla may have to report a loss of up to $100 million for Q2.

With the price of Bitcoin recently dropping to revisit levels last seen in January, CNBC business analyst Kate Rooney asserted on July 6 that Tesla may face an “impairment charge” — requiring it to report the drawdown in a disclosure to the U.S. Securities and Exchange Commission (SEC).

She noted that as Tesla first disclosed its $1.5 billion in Bitcoin purchases in February, onlookers believe the electric vehicle manufacturer may have been underwater at the end of the quarter. 

“Tesla holds crypto as an intangible asset and because of accounting rules, when Bitcoin's value drops below a certain amount, companies have to mark that down in their financial statements,” Rooney said, adding:

“Tesla says if Bitcoin's price falls below the carry cost, or where Tesla bought it, at any time after they bought it, an impairment cost is recognized.”

The analyst claimed that unnamed sources estimate the impairment charge could result in a loss of between $25 million and $100 million for Tesla on paper.

However, Rooney added that Tesla also cannot mark up the price of the BTC it holds until the position is realized in the form of a sale.

Tesla’s CEO Elon Musk has become a highly polarizing figure to the crypto community in recent months, with the firm’s Bitcoin investment and support for BTC payments helping ignite rallies into new all-time highs for the asset.

However, a combination of Tesla suspending BTC payments over concerns regarding the environmental impact of mining, and Musk’s persistent Twitter-based Dogecoin proselytizing, the business magnate has fallen out of favor with much of the crypto community.

Roughly 11 hours ago as of this writing, Reddit user “StablecoinsFraud” posted a screenshot of a tweet they claim Musk deleted after it pushed up BTC prices. “Elon Musk has deleted a post he posted last night that pumped the Bitcoin price. Someone in his ear?” they wrote.

Sygnum becomes first bank in the world to offer Eth2 staking

Sygnum emphasized the robust DeFi ecosystem being built on Ethereum.

Crypto-focussed Swiss bank, Sygnum Bank, has announced it has become the first bank in the world to allow its clients to stake Ether.

According to the July 6 blog post, the firm’s clients can now stake ETH through Sygnum’s institutional banking platform to earn yields of up to seven percent annually.

Sygnum describes itself as the “world’s first digital asset bank,” having secured a banking licence in Switzerland and a capital markets services license in Singapore during August 2019 and October 2019 respectively.

The firm asserts that “the vast majority of decentralized products and services run on Ethereum,” noting the DeFi sector’s Total Value Locked (TVL) has grown by more than three times since the start of 2021:

“With Ethereum powering the exponential growth of decentralized finance (DeFi) applications, staking is a compelling choice for long-term Ethereum investors also seeking attractive yields.”

Thomas Eichenberger, Sygnum’s head of business units, described Ethereum staking as “a core element for digital asset portfolios.”

Sygnum launched a staking service for Tezos (XTZ) in November 2020, and has offered a fixed term deposit product for its Digital Swiss Franc stablecoin, DCHF, since March.

The bank faces competition from many crypto-native staking providers and centralized exchanges, including leading U.S. firms Coinbase and Kraken.

The digital asset bank is also looking to support DeFi assets, launching regulated banking services for eight leading tokens including UNI, MKR, and CRV last month.

According to Staking Rewards, Eth2 is currently the second-largest Proof-of-Stake network by staked capitalization with $13.5 billion, despite only 5% of circulating Ether currently having been locked for staking.

Cardano (ADA) has the largest staked capitalization with $31.8 billion and 70.7% of supply currently locked.

Aave to launch permissioned deployment for institutions in July

In response to “extensive demand from various institutions,” Aave’s permissioned deployment will go live this month.

Leading DeFi money market, Aave, has announced plans to launch a permissioned version of its platform for institutional investors this month.

The platform will be launched in partnership with crypto custodian and service provider, Fireblocks.

On June 4, Twitter user “TraderNoah” shared a screenshot of an email they claim to have received after attending Blockworks’ “Next Steps in Institutional DeFi” webinar that featured Aave founder and CEO Stani Kulechov, Fireblocks CEO and co-founder Michael Shaulov, and Galaxy Digital CEO Mike Novogratz.

Both during the conference and in the email, it was revealed that Aave’s institutional product, dubbed “Aave Pro,” intends to launch this month in response to “extensive demand from various institutions.”

At launch, Aave Pro will only support four assets — BTC, ETH, AAVE, and USDC, with its pools segregated from Aave’s other deployments.

The platform will add a whitelisting layer onto its V2 smart contracts to ensure that only “institutions, corporates, and fintechs” that have passed Fireblocks’ Know-Your-Customer verification can access Aave Pro. Fireblocks will also be tasked with implementing anti-money laundering and anti-fraud controls for Aave Pro. 

The email also notes plans to decentralize governance for Aave Pro in the future.

In May, Kulechov first revealed that Aave was building a permissioned pool for institutions. Aave’s three deployments currently represent a total value locked of roughly $17 billion combined.

The screenshot received mixed reactions on crypto Twitter, with some highlighting that the platform provides a rail for institutions to begin deeply engaging with decentralized finance.

Others, however, expressed apprehension regarding Fireblocks’ involvement with the platform, emphasizing an ongoing lawsuit filed against the firm by staking provider, StakeHound, over the deletion of private keys to a wallet containing $72 million worth of Ether.

Aave Pro is not Fireblocks’ first foray into helping institutional capital access decentralized finance, having teamed up with Compound in early 2020 to launch services catered to institutional investors.