Blockchain technology is claimed to be according to blockchain proponents to be one of the most impactfull discoveries in the recent history. It is promised to have a massive potential to change how we handle online transactions. Despite some skeptics, the majority of experts agree that blockchain has the potential to disrupt the banking and financial industry, and many other ones! To put it simply, blockchain enables decentralized transactions across a P2P network. There are applications where those propertied can be very useful, but there are many cases where blockchain migh not be the best solution even though it is hyped to be solution for very many application (remember to ask Do you need a blockchain? often).
This 16 Blockchain Disruptions (Infographic) by bitfortune.net tries to help you understand how the blockchain technology can and will improve 16 different industries, from music to government.
Infographic by bitfortune.net
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Tomi Engdahl says:
Timmy Shen / Forkast:
IntoTheBlock: the Bitcoin network hash rate fell by 38.8%+ on December 24 from its December 21 peak as many US-based miners paused operations due to blizzards — The Bitcoin network hashrate has dropped by more than 38.8% from its peak on Wednesday, as many U.S.-based miners have been forced …
Bitcoin hashrate drops nearly 40% as deadly U.S. storm unplugs miners
https://forkast.news/headlines/bitcoin-hashrate-drops-nearly-40-as-deadly-u-s-storm-unplugs-miners/
The Bitcoin network hashrate has dropped by more than 38.8% from its peak on Wednesday, as many U.S.-based miners have been forced to switch down their facilities due to deadly blizzards.
Fast facts
Bitcoin hashrate, the level of computing power used for mining and processing transactions, came in at 155.28 exahashes per second on Saturday, down from 253.88 exahashes on Wednesday, according to data from IntoTheBlock.
A winter storm has claimed at least 32 lives across the U.S., as of Monday morning in Hong Kong, according to media reports.
Core Scientific, a major Bitcoin miner that filed for Chapter 11 bankruptcy protection last week, tweeted on Saturday that it would be “participating in multiple power curtailments to help stabilize the electrical grid” and that Bitcoin production was expected to slow down.
Bitcoin miner Riot Blockchain tweeted on Thursday that it was closing down its facility “due to the extreme weather condition in Texas.”
Tomi Engdahl says:
Kabosu, a Shiba Inu adopted by a kindly nursery school teacher near Tokyo, became internationally famous as a meme before finding herself fronting a spoof bitcoin challenger whose popularity is no longer a joke.
Kabosu has sadly been diagnosed with critical leukaemia.
Dogecoin: The Japanese rescue dog who became the unlikely face of a crypto sensation
https://www.independent.co.uk/space/dogecoin-dog-bitcoin-crypto-shiba-meme-kabosu-b2252714.html?utm_medium=Social&utm_source=Facebook#Echobox=1672269677
Kabosu, a Shiba Inu adopted by a kindly nursery school teacher near Tokyo, became internationally famous as a meme before finding herself fronting a spoof bitcoin challenger whose popularity is no longer a joke
This article was originally published in 2021
For a cryptocurrency originally conceived as a joke, a satire against bitcoin and the whole crazed online gold rush of the last decade, Dogecoin has had an absolutely extraordinary year.
Tomi Engdahl says:
Hannah Miller / Bloomberg:
Solana cofounders Anatoly Yakovenko and Raj Gokal scramble to move past FTX’s stain on their token, down 96% from November 2021; FTX and Alameda bought 58M+ SOL — Solana, the blockchain network once championed by Sam Bankman-Fried, is drawing immense scrutiny as industry watchers wonder whether …
Solana Founders Scramble to Move Past FTX’s Stain on Their Token
https://www.bloomberg.com/news/articles/2022-12-28/solana-sol-founders-scramble-to-move-past-ftx-s-stain-on-their-token?leadSource=uverify%20wall
The price of the SOL cryptocurrency is down 96% from highs
Sam Bankman-Fried was big supporter of Solana prior to fall
Tomi Engdahl says:
Opinion
ZK Rollups Bring Ethereum’s Decentralized Vision Into Focus
Polygon founder Mihailo Bjelic makes the case for zero knowledge technology
https://www.coindesk.com/consensus-magazine/2022/12/23/web3-zero-knowledge-tech/
Tomi Engdahl says:
Solana joins ranks of FTT, LUNA with SOL price down 97% from peak — Is a rebound possible?
https://cointelegraph.com/news/solana-joins-ranks-of-ftt-luna-with-sol-price-down-97-from-peak-is-a-rebound-possible
Tomi Engdahl says:
Wall Street Journal:
A look at the rise and fall of Alameda Research, whose troubles began well before the crypto crash as it took big gambles, winning some and losing plenty — Trading firm took big gambles, winning some and losing plenty; ‘complete lack of a risk-management framework’
Troubles at Sam Bankman-Fried’s Alameda Began Well Before Crypto Crash
Trading firm took big gambles, winning some and losing plenty; ‘complete lack of a risk-management framework’
https://www.wsj.com/articles/alameda-sam-bankman-fried-ftx-crypto-crash-11672434101?mod=djemalertNEWS
Sam Bankman-Fried built the cryptocurrency exchange FTX on the reputation of his trading firm, Alameda Research LLC.
Alameda was applying Wall Street-style wizardry to the crypto world—and outsiders thought it was winning big. But little was known beyond the firm about its trades, which included a lucrative early bet involving bitcoin in Japan. Alameda had no outside investors and didn’t disclose its perfor
Tomi Engdahl says:
Wall Street Journal:
Sources: Sam Bankman-Fried will likely plead not guilty to fraud and other charges at a January 3 hearing; SBF returns to Twitter to deny he moved Alameda funds
Sam Bankman-Fried Likely to Plead Not Guilty to Fraud Charges
U.S. prosecutors had charged the FTX founder with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse
https://www.wsj.com/articles/sam-bankman-fried-likely-to-enter-plea-of-not-guilty-11672431309?mod=djemalertNEWS
FTX founder Sam Bankman-Fried is likely to plead not guilty to fraud and other charges at his arraignment next week, according to people familiar with the matter.
The U.S. attorney’s office for the Southern District of New York earlier this month charged Mr. Bankman-Fried with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, alleging that he oversaw one of the biggest financial frauds in American history. Mr. Bankman-Fried is likely to appear in person in New York to enter his plea on Jan. 3, one of the people said.
Before his arrest, Mr. Bankman-Fried blamed the loss of customer funds on sloppy record-keeping and a bank-account issue that allowed Alameda Research, an affiliated trading firm, to cover large losses with money destined for FTX. His not guilty plea was widely expected.
Mr. Bankman-Fried stands at odds with his associates— Caroline Ellison, the former chief executive of Alameda Research, and Gary Wang, FTX’s former chief technology officer—who both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with. Both are cooperating with federal investigators.
Tomi Engdahl says:
Nikhilesh De / CoinDesk:
What 2023 may bring for crypto regulation in the US and around the world, as bankruptcies stretch into the new year, attracting lawmakers and criminal probes
FTX, Congress, Stablecoins: What 2023 May Bring for Crypto Regulations
https://www.coindesk.com/policy/2022/12/30/ftx-congress-stablecoins-what-2023-may-bring-for-crypto-regulations/
CoinDesk’s policy team predicts the issues and topics that may take center stage over the next 12 months.
Tomi Engdahl says:
Stephen Katte / Cointelegraph:
Luke Dashjr, one of the original core BTC developers, says someone stole “basically” all his BTC by compromising his PGP key; a wallet shows ~217 BTC were moved
Bitcoin core developer claims to have lost 200+ BTC in hack
https://cointelegraph.com/news/bitcoin-core-developer-claims-to-have-lost-200-btc-in-hack
A Bitcoin OG and core developer Luke Dashjr claims his PGP key was compromised, resulting in virtually all his Bitcoin being stolen from him on Dec. 31.
One of the original core developers behind Bitcoin
BTC
tickers down
$16,722
, Luke Dashjr, claims to have lost “basically” all his BTC as a result of a hack that occurred just before the new year.
In a Jan. 1 post on Twitter, the developer said the alleged hackers had somehow gained access to his PGP (Pretty Good Privacy) key, a common security method that uses two keys to gain access to encrypted information.
In the thread, he shared a wallet address where some of the stolen BTC had been sent but did not reveal how much of his BTC was stolen in total.
At the time of writing the wallet address in question shows four transactions between 2:08 and 2:16 pm UTC on Dec. 31, totalling 216.93 BTC — worth $3.6 million at current prices.
Tomi Engdahl says:
Crypto Exchange Wash Trading Stats Depict Worrying Picture
Author: Chayanika Deka
https://cryptopotato.com/crypto-exchange-wash-trading-stats-depict-worrying-picture/
Crypto platforms with 70% total reported volume of wash trading moved up by 46 positions in rankings.
It’s no secret that wash trading continues to plague the crypto market. A paper titled “Crypto Wash Trading,” published by the National Bureau of Economic Research (NBER), found that an overwhelming number of unregulated crypto exchanges account for a sizeable portion of wash trades.
It was found that wash trades accounted for as high as 77.5% of the total trading volume on unregulated exchanges, with a median of 79.1%. Meanwhile, wash trades on the twelve Tier-2 exchanges were observed to be more than 80% of the total trade volume, “which is still over 70% after accounting for observable exchange heterogeneity.”
Worrying Figures
The study stated that wash trading in crypto exchanges is positively correlated with the prices of crypto-assets over the short term.
Moreover, wash trades occur less in platforms with “longer establishment histories and larger userbases” Contrarily, less popular exchanges have short-term incentives for wash trading without attracting scrutiny.
In the first quarter of 2020 alone, the NEBR study recorded a whopping $4.5 trillion in wash trading in spot markets, while the same for the derivatives market stood at $1.5 trillion.
Tomi Engdahl says:
if you build the casino, they will come
Money laundering at it’s best
Tomi Engdahl says:
At the end of 2021, a myriad of people thought a handful of smart contract platform tokens, often referred to as ‘Ethereum killers,’ would flip the second-largest crypto asset in terms of market capitalization in 2022. As 2022 comes to an end, statistics show that none of the so-called ‘Ethereum killers’ have surpassed the leading […]
‘Ethereum Killers’ Managed to ‘Kill’ Themselves in 2022 Rather Than Beat the Smart Contract Economy’s Heavyweight Champ
https://news.bitcoin.com/ethereum-killers-managed-to-kill-themselves-in-2022-rather-than-beat-the-smart-contract-economys-heavyweight-champ/
At the end of 2021, a myriad of people thought a handful of smart contract platform tokens, often referred to as ‘Ethereum killers,’ would flip the second-largest crypto asset in terms of market capitalization in 2022. As 2022 comes to an end, statistics show that none of the so-called ‘Ethereum killers’ have surpassed the leading smart contract platform token, and a number of these tokens have lost considerable amounts of value during the crypto winter.
Ethereum Outperformed Its Competitors in terms of Market Cap, Decentralized Finance Action, and Non-Fungible Token Sales
Tomi Engdahl says:
Clive Thompson / MIT Technology Review:
A profile of blockchain auditing service CertiK, which inspects smart contracts to help clients like Yuga Labs avoid critical bugs that can lead to lost crypto
The computer scientist who hunts for costly bugs in crypto code
https://www.technologyreview.com/2023/01/02/1064795/certik-ronghui-gu-crypto-computer-science/
Programming errors on the blockchain can mean $100 million lost in the blink of an eye. Ronghui Gu and his company CertiK are trying to help.
In the spring of 2022, before some of the most volatile events to hit the crypto world last year, an NFT artist named Micah Johnson set out to hold a new auction of his drawings. Johnson is well known in crypto circles for images featuring his character Aku, a young Black boy who dreams of being an astronaut. Collectors lined up for the new release. On the day of the auction, they spent $34 million on the NFTs.
Then tragedy (or, depending on your point of view, comedy) struck. The “smart contract” code that Johnson’s software team wrote to run the crypto auction contained a critical bug. All $34 million worth of Johnson’s sales was locked on the Ethereum blockchain. Johnson couldn’t withdraw the funds; nor could he refund money to people who’d bid on an NFT but lost their auction. The virtual money was frozen, untouchable—“locked on chain,” as they say.
Johnson might wish he’d hired Ronghui Gu.
Gu is the cofounder of CertiK, the largest smart-contract auditor in the fizzy and unpredictable world of cryptocurrencies and Web3.
CertiK’s work won’t prevent you from losing your money when a cryptocurrency collapses. Nor will it stop a crypto exchange from using your funds inappropriately. But it could help prevent an overlooked software issue from doing irreparable damage. The company’s clients include some of crypto’s biggest players, like the Bored Ape Yacht Club and the Ronin Network, which runs a blockchain used in games. Clients sometimes come to Gu after they’ve lost hundreds of millions—hoping he can make sure it doesn’t happen again.
“This is a real wild world,” Gu says with a laugh.
Crypto code is much more unforgiving than traditional software. Silicon Valley engineers generally try to make their programs as bug-free as possible before they ship, but if a problem or bug is later found, the code can be updated.
That’s not possible with many crypto projects. They run using smart contracts—computer code that governs the transactions
The thing is, once smart-contract code is live on a blockchain, you can’t update it. If you discover a bug, it’s too late: the whole point of blockchains is that you can’t alter stuff that’s been written to them. Worse, code that’s hosted on a blockchain is publicly visible—so black-hat hackers can study it at their leisure and look for mistakes to exploit.
The sheer number of hacks is dizzying, and they are wildly lucrative. Early last year, the Wormhole network had more than $320 million worth of crypto stolen. Then the Ronin Network lost upwards of $600 million in crypto.
“The most expensive hack in history,” Gu says, shaking his head in near disbelief. “They say Web3 is eating the world—but hackers are eating Web3.”
A bustling field of auditors has emerged in recent years, and Gu’s CertiK is the biggest: the company, which has been valued at $2 billion, figures it has done an estimated 70% of all smart-contract audits. It also runs a system that monitors smart contracts to detect in real time if any are being hacked.
Tomi Engdahl says:
Paul Kiernan / Wall Street Journal:
The US Federal Reserve, FDIC, and OCC warn banks that issuing or holding crypto “is highly likely to be inconsistent with safe and sound banking practices” — Regulators say holding cryptocurrencies is likely inconsistent with safe banking practices — Crypto’s Crash Has Been Swift but Largely Self-Contained.
ederal Reserve, FDIC and OCC Warn Banks About Cryptocurrency Risks
Regulators say holding cryptocurrencies is likely inconsistent with safe banking practices
https://www.wsj.com/articles/federal-reserve-fdic-and-occ-warn-banks-about-cryptocurrency-risks-11672783296?mod=djemalertNEWS
A group of powerful bank regulators on Tuesday highlighted what they said were a litany of risks stemming from cryptocurrencies and expressed skepticism that the assets can be safely held by the financial institutions they oversee.
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said that recent failures of major crypto firms led them to exercise caution in reviewing banks’ proposals to engage with the market. They highlighted fraud and scams, market volatility, legal uncertainty, and weak risk-management and governance practices at crypto firms, among other things, as reasons for concern.
“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” the regulators said in a joint statement. Based on their experience, they said, issuing or holding cryptocurrencies “is highly likely to be inconsistent with safe and sound banking practices.”
The warning reinforced policy makers’ dimming view of cryptocurrencies following the collapse of trading platform FTX in November and suggested bank regulators could throw up more hurdles for firms in the sector. Prosecutors say FTX and its affiliates misused customer funds, and they have charged its founder, Sam Bankman-Fried, with criminal offenses including fraud. He has pleaded not guilty.
The agencies said banks “are neither prohibited nor discouraged” from providing services to customers of any specific type. They said they are “continuing to assess whether or how” banks can deal with cryptocurrencies in a way that adequately ensures the institutions’ safety and soundness, consumer protection and legal compliance.
Since the 2009 launch of bitcoin, the first cryptocurrency, most large banks have been reluctant to embrace the asset class. The Securities and Exchange Commission says it considers most cryptocurrencies to be unregistered securities, making them legally risky for regulated firms to offer or sell.
But a handful of banks have gotten involved.
In the statement Tuesday, the bank regulators said they “have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.”
They also warned of the susceptibility of so-called stablecoins—cryptocurrencies backed by supposedly safe, dollar-denominated assets—to potential runs by spooked investors. Such events could cause sudden deposit outflows for banks that hold cash reserves for stablecoin issuers.
The second-largest stablecoin issuer, Circle Internet Financial Ltd., said recently that it had more than $11 billion in cash held at banks including Silvergate, Bank of New York Mellon Corp. , Citizens Trust Bank and Customers Bank.
Tomi Engdahl says:
Axios:
Sources: crypto payments startup Wyre told staff that it is shutting down; Bolt planned to acquire Wyre for ~$1.5B but canceled the deal in September 2022 — Wyre, a crypto payments company founded in 2013, has told employees that it is shutting down amid layoffs, Axios has learned.
Crypto firm Wyre said to shut down as CEO admits “scaling back”
https://www.axios.com/2023/01/03/wyre-shutdown-crypto-winter
Wyre, a crypto payments company founded in 2013, has told employees that it is shutting down amid layoffs, Axios has learned.
Why it matters: The broad market downturn, combined with the crash in cryptocurrency activity, has led to a shakeout among some struggling companies.
Details: Two former employees confirmed news of the shutdown, with one noting that CEO Ioannis Giannaros informed some via email during the holiday season that the the company would liquidate, and planned to terminate services in January 2023.
Tomi Engdahl says:
Eliza Gkritsi / CoinDesk:
Bitcoin miner Core Scientific plans to shut down mining rigs tied to Celsius Mining, its largest client with 37K+ machines, as both companies undergo bankruptcy — The two firms have been engaged in litigation over a 2020 hosting contract, which Core Scientific says is costing it $2 million in revenue per month.
Core Scientific to Shut Down Celsius Crypto Mining Equipment
https://www.coindesk.com/business/2023/01/04/core-scientific-to-shut-down-celsius-crypto-mining-equipment/
The two firms have been engaged in litigation over a 2020 hosting contract, which Core Scientific says is costing it $2 million in revenue per month.
Tomi Engdahl says:
Shaurya Malwa / CoinDesk:
Bonk, a Shiba Inu-themed coin on Solana issued on December 25, has risen 2,220% in the past week and 150% in the past 24 hours, offsetting some of SOL’s decline
Shiba Inu-Themed BONK Tokens Are Yielding Nearly 1,000% for Solana Liquidity Providers
https://www.coindesk.com/markets/2023/01/04/shiba-inu-themed-bonk-tokens-are-yielding-nearly-1000-for-solana-liquidity-providers/
The memecoin is up over 150% in the past 24 hours and have recorded some of the highest trading volumes on Solana-based decentralized exchanges.
Tomi Engdahl says:
Peter Rudegeair / Wall Street Journal:
The Global X Fintech ETF dropped 52% in 2022, above the broader financial sector’s 12% drop and Nasdaq Composite Index’s 33%, weighed down by interest rates
Fintech Stocks Did Worse Than Fin or Tech in 2022
Higher interest rates and unprofitable business models weigh on the sector
https://www.wsj.com/articles/fintech-stocks-did-worse-than-fin-or-tech-in-2022-11672708220?mod=djemalertNEWS
Tomi Engdahl says:
Matt Levine / Bloomberg:
The US case against alleged Mango Markets manipulator Avraham Eisenberg highlights traders treating crypto as a game, forgetting the real-world consequences — Mango — So here’s a trade. — You open two accounts on a commodity futures exchange, Account A and Account B.
Crypto Manipulation Has Consequences
Also Gemini Earn, index funds and bored traders quitting.
https://www.bloomberg.com/opinion/articles/2023-01-03/crypto-manipulation-has-consequences
Tomi Engdahl says:
Crystal Kim / Axios:
A US judge rules that the crypto deposits in bankrupt crypto lender Celsius Network’s yield-bearing accounts belong to Celsius and not the individual holders — Celsius Network’s bankruptcy might have just set a precedent in determining what crypto assets belong to whom when stored on a centralized platform.
Bankruptcy judge rules that Earn account assets belong to Celsius
https://www.axios.com/2023/01/04/celsius-bankruptcy-earn-accounts
Celsius Network’s bankruptcy might have just set a precedent in determining what crypto assets belong to whom when stored on a centralized platform.
Driving the news: The judge in a 45-page written decision on Wednesday concluded that the deposits in the lender’s yield-bearing Earn accounts belong to the estate — that is Celsius — and not the individual holders of those accounts.
Why it matters: Celsius had 600,000 accounts in its Earn program when it filed for Chapter 11 mid-2022, which collectively held roughly $4.2 billion in assets as of July 2022.
Part of that included stablecoins then-valued at around $20 million. All of that is property of the estate, or Celsius.
Between the lines: Investors with Earn accounts have been and remain creditors of Celsius. That means Celsius still owes them. Exactly how much they’ll recover, is the unknown.
The big picture: Crypto platforms’ Terms of Service could be central to how other bankruptcy proceedings shake out.
Tomi Engdahl says:
Jack Schickler / CoinDesk:
US officials say the DOJ seized or is in the process of seizing assets potentially tied to FTX, like ~$450M in Robinhood shares whose ownership is under dispute — Officials may later seek to have Sam Bankman-Fried forfeit the assets, potentially including as much as $450 million in stocks, to avoid benefiting from crimes
US DoJ Is Seizing Banking Assets, Robinhood Shares Linked to FTX, Court Told
https://www.coindesk.com/policy/2023/01/04/us-doj-is-seizing-banking-assets-robinhood-shares-linked-to-ftx-court-told/
Officials may later seek to have Sam Bankman-Fried forfeit the assets, potentially including as much as $450 million in stocks, to avoid benefiting from crimes
Tomi Engdahl says:
Jesse Hamilton / CoinDesk:
The US SEC accuses alleged fraudster Neil Chandran and four others of scamming investors for $45M+ on the false promise of a deal to sell blockchain technology — The U.S. securities agency is going after the people behind what it says was a massive fraud stealing from tens of thousands of investors.
SEC Pursues $45M Scam Based in Fake Blockchain Technology
https://www.coindesk.com/policy/2023/01/04/sec-pursues-45m-scam-based-in-fake-blockchain-technology/
The U.S. securities agency is going after the people behind what it says was a massive fraud stealing from tens of thousands of investors.
Tomi Engdahl says:
Nelson Wang / CoinDesk:
The US SEC files a limited objection to Binance.US’ $1.02B bid for crypto lender Voyager’s assets, asking for sufficient details on how Binance plans to pay — The agency is asking for more details how the crypto exchange can afford the deal. — Join the most important conversation …
SEC Files Limited Objection to Binance.US’s $1B Deal for Voyager Assets
The agency is asking for more details how the crypto exchange can afford such a large d
https://www.coindesk.com/policy/2023/01/04/sec-files-limited-objection-to-binanceuss-1b-deal-for-voyager-assets/
Tomi Engdahl says:
New York Times:
Coinbase settles with New York regulators over breaking money-laundering laws for $100M, comprising a $50M fine and $50M for compliance; COIN closes up 12.2% — The U.S. crypto exchange will pay a $50 million fine for letting customers open accounts with few background checks and spend $50 million to improve compliance.
https://www.nytimes.com/2023/01/04/business/coinbase-settlement-anti-money-laundering.html
Tomi Engdahl says:
Adam Morgan McCarthy / The Block:
CoinShares: inflows to crypto asset funds fell 95% YoY from $9.1B in 2021 to $433M in 2022, the worst year since 2018, when inflows totaled $223M — – Crypto asset funds saw the lowest inflows last year since 2018. — Inflows in 2022 declined to $433 million as bitcoin plummeted over 60%, according to CoinShares data.
Crypto asset funds saw inflows plummet 95% last year to just $433 million
https://www.theblock.co/post/199176/crypto-asset-funds-saw-inflows-plummet-95-last-year-to-just-433-million
Quick Take
Crypto asset funds saw the lowest inflows last year since 2018.
Inflows in 2022 declined to $433 million as bitcoin plummeted over 60%, according to CoinShares data.
Tomi Engdahl says:
Andrew Hayward / Decrypt:
NFT service Magic Eden, the largest Solana marketplace, blames a hacked image caching service for some users seeing porn and TV stills instead of intended NFTs
Why NFTs on Magic Eden Are Unintentionally Displaying Porn, ‘Big Bang Theory’ Images
The top Solana marketplace says there’s no need to panic, and it has not been hacked.
https://decrypt.co/118329/magic-eden-nfts-porn-big-bang-theory
Some users of Magic Eden, the largest Solana marketplace, saw some curious images on the platform over the past day instead of the NFTs they tried to view—including pornographic images and stills from the TV series “The Big Bang Theory.”
Now the marketplace is blaming a hacked image caching service for the brief mix-up. Magic Eden, which also supports NFTs on Ethereum and Polygon, tweeted late Tuesday afternoon that “a third-party service” used for caching images had been compromised. Users began tweeting about the issue late Monday.
“Your NFTs are safe and Magic Eden has not been hacked,” the marketplace tweeted. “Unfortunately, you might’ve seen some um, unsavory images. Make sure you do a hard refresh on your browser to fix it.”
The announcement came after various users tweeted about unexpectedly seeing nude photos and images from the TV series beginning on Monday. One video shared by a Twitter user shows “Big Bang Theory” images flashing in place of their owned NFTs for a brief moment before the actual artwork displayed as intended.
“What the fuck is happening, why my 5-years-old kid watching porn JPEGs on [the Magic Eden] website,” Twitter user SolProfessor565 tweeted Tuesday.
A Magic Eden representative told Decrypt shortly after the tweet announcement that the startup, valued at $1.6 billion as of June 2022, first became aware of the situation early this afternoon and implemented a fix within an hour. However, some users were still seeing the unexpected images and needed to hard refresh their web browser, so the statement was made.
The company does not believe that it was specifically targeted via the hack on the third-party vendor, a representative added, which Magic Eden believes affected other websites as well. The NFT startup would not name the image caching partner due to security concerns.
An NFT is a blockchain token that represents ownership of a unique item, including digital goods such as artwork, collectibles, and video game items. Magic Eden is the dominant player in the Solana NFT market, and has gradually expanded to include other platforms as well.
There have been past examples of actual NFT artwork being hosted on centralized web servers, which can cause problems should a server go offline. In this case, however, it appears that the Magic Eden website itself experienced the issue due to an attack on an external service provider, and that the actual NFTs themselves were ultimately unaffected.
Tomi Engdahl says:
Samuel Agini / Financial Times:
FTX’s collapse has forced the global sports industry to rethink lucrative crypto sponsorship deals, some of which replaced gambling partners because of bans
FTX failure forces rethink on global sports sponsorship
https://www.ft.com/content/c75c82ad-9fab-491a-b876-d1ed5b546131
Tomi Engdahl says:
Shaurya Malwa / CoinDesk:
Dune Analytics: 630K+ wallets created 2.82M Ethereum Name Service domains in 2022, including 430K in September, the most, and 52K in December, the least
Ethereum Name Service Recorded Over 2.8M Domain Registrations in 2022
The figure represents 80% of all registrations since the service launched.
https://www.coindesk.com/markets/2023/01/04/ethereum-name-service-recorded-over-28m-domain-registrations-in-2022/
Ethereum Name Service (ENS) saw a lifetime record number of domain registrations in 2022 amid a broader market frenzy in which some traders treated the domains as investments.
ENS is a decentralized domain name protocol that runs atop the Ethereum network. It provides users with an easily readable name such as “abc.eth” instead of a complex, long-form alphanumeric address for their crypto wallets, similar to the way the Domain Name System substitutes memorable names such as “coindesk.com” for websites’ numeric internet-protocol addresses.
Data from Dune Analytics shows that more than 630,000 unique wallets created 2.82 million domain names, with 459,000 of those classified as “primary names.” Primary names are ENS addresses that resolve to a user’s crypto wallet and can be used as a proxy to search for information on blockchain explorers, such as Etherscan. The 2.82 million figure represents over 80% of all registrations since the service started in 2017.
Tomi Engdahl says:
Levi Winslow / Kotaku:
After YouTuber Coffeezilla reported on Logan Paul’s apparently sham NFT game CryptoZoo, Paul finally responds, acknowledging some involved were “bad actors”
Logan Paul Says Some Of His NFT Game Devs Were ‘Con Men,’ But He Didn’t Scam
Blockchain investigator Stephen ‘Coffeezilla’ Findeisen may see Paul in court
https://kotaku.com/logan-paul-coffeezilla-youtube-cryptozoo-nft-game-scam-1849949957
Let me catch you up real quick. Coffeezilla, a YouTuber known for investigating fraudsters and scammers in the crypto space, spent a year looking into Logan Paul and his “really fun game that makes you money,” CryptoZoo. This “game” was set up to generate passive income for players. You purchase the game’s currency, zoo coins, to spend on egg NFTs that hatch into animals. You can breed these animals to make hybrids, with rarer ones yielding more zoo coins which can then be cashed out into IRL money. It sounded enticing in theory but was an apparent rug pull in practice, as members of Paul’s team (though not Paul himself) sold their coins early to make millions while Paul’s ardent fans and early investors lost hundreds of thousands of dollars, according to Coffeezilla’s reporting. Based on his three-part series, CryptoZoo seemed to be a sham.
Logan Paul ends his video by assuring viewers that CryptoZoo is still coming, in defiance of Coffeezilla’s claims that it’s not actually being made. He also threatens Coffeezilla with legal action for the “defamation,” saying he will need a good lawyer. However, Paul’s still open to having Coffeezilla appear on his podcast, Impaulsive.
Tomi Engdahl says:
Taylor Lorenz / Washington Post:
After FTX collapsed, citizen journalists, including @AutismCapital, Coffeezilla, and Doomberg, stepped up to cover the saga, often outshining traditional media
https://www.washingtonpost.com/technology/2023/01/05/ftx-citizen-journalism/
Tomi Engdahl says:
David Benoit / Wall Street Journal:
US bank Silvergate, which caters to crypto, reports liquidating debt to cover $8.1B withdrawals as FTX collapsed and laying off 40% of its staff; SI falls 40%+ — Bank sold assets at a loss to cover withdrawals and cut 40% of its staff but remains committed to crypto
Silvergate Raced to Cover $8.1 Billion in Withdrawals During Crypto Meltdown
Bank sold assets at a loss to cover withdrawals and cut 40% of its staff but remains committed to crypto
https://www.wsj.com/articles/silvergate-raced-to-cover-8-1-billion-in-withdrawals-during-crypto-meltdown-11672895207?mod=djemalertNEWS
The collapse of crypto exchange FTX sparked a run on Silvergate SI 27.10% Capital Corp., forcing the bank to sell assets at a steep loss to cover some $8.1 billion in withdrawals.
Crypto-related deposits plunged 68% in the fourth quarter, the bank said in an early release of some quarterly results. To satisfy the withdrawals, Silvergate liquidated debt it was holding on its balance sheet. The $718 million it lost selling the debt far exceeds the bank’s total profits since at least 2013.
Silvergate shares fell 40% in early trading Thursday.
The bank has laid off 40% of its staff, or about 200 employees, and said it would pare back its businesses. It shelved a plan to launch its own digital currency, writing off $196 million it spent buying the technology that Facebook had built in its failed attempt to start a crypto-based payments network.
Silvergate caters to companies in the crypto business, taking their deposits and operating a network that links investors to crypto exchanges. FTX and other companies controlled by its founder, Sam Bankman-Fried, accounted for about $1 billion of the bank’s deposits.
Their November collapse rattled the crypto market and sent Silvergate’s stock down sharply.
Silvergate was able to survive such a steep decline in deposits because it isn’t structured like most banks. It sold off much of its traditional banking operations and branches to focus on providing bank accounts to crypto exchanges and investors. Crypto-related deposits account for some 90% of the bank’s total, and it keeps almost all of its deposits in cash or easy-to-sell securities.
The bank said it remains committed to crypto and has the funding to handle a “sustained period of transformation.”
Silvergate has faced intense scrutiny over its relationship with Mr. Bankman-Fried’s companies, and the crypto market’s implosion has raised questions about the viability of the bank’s business model. A group of federal regulators earlier this week warned banks against being too exposed to the crypto market.
Silvergate’s stock is down more than 70% in the last three months, and its shares are heavily shorted.
Tomi Engdahl says:
How FTX’s Sam Bankman-Fried Went From Crypto Golden Boy to Villain
https://www.wsj.com/articles/how-ftx-sam-bankman-fried-went-from-crypto-golden-boy-to-villain-11668199208?mod=article_inline
The exchange’s founder, once seen as a steady hand in the world of digital assets, is under investigation and his company filed for bankruptcy
Tomi Engdahl says:
Bankruptcy Judge Says Celsius Crypto Investors Don’t Own Their Accounts
A sneaky clause in Celsius’ terms and conditions made all investments property of the now-defunct crypto trading platform.
https://gizmodo.com/crypto-celsius-earn-accounts-alex-mashinsky-1849957843?utm_campaign=Gizmodo&utm_content=Giz-+Crypto&utm_medium=SocialMarketing&utm_source=facebook
Tomi Engdahl says:
‘We don’t like our money’: The story of the CFA and Bitcoin in Africa
African crypto experts and entrepreneurs explain why the CFA franc is an uncomfortable currency and why Bitcoin is making waves as a replacement.
https://cointelegraph.com/news/we-don-t-like-our-money-the-story-of-the-cfa-and-bitcoin-in-africa
Tomi Engdahl says:
14th Anniversary of Bitcoin’s Genesis Block: A Look Back at the Birth of Cryptocurrency
https://news.bitcoin.com/14th-anniversary-of-bitcoins-genesis-block-a-look-back-at-the-birth-of-cryptocurrency/
Tomi Engdahl says:
The computer scientist who hunts for costly bugs in crypto code
Programming errors on the blockchain can mean $100 million lost in the blink of an eye. Ronghui Gu and his company CertiK are trying to help.
https://www.technologyreview.com/2023/01/02/1064795/certik-ronghui-gu-crypto-computer-science/
Tomi Engdahl says:
https://hackaday.com/2023/01/06/the-surprisingly-simple-way-to-steal-cryptocurrency/
Tomi Engdahl says:
https://hackaday.com/2023/01/06/this-week-in-security-lastpass-takeaway-bitcoin-loss-and-pytorch/
Bitcoin Hacker Hacked
Luke Dashjr is a Bitcoin Core developer, the primary signer of the Bitcoin Knots software, and has suffered a major security breach. This may be a follow-on incident from a November physical attack, where someone managed to reboot his co-located server from a flash drive, and install a backdoor. That one was caught, and the malware was seemingly removed. Luke lost a total of about 200 bitcoin, out of both his active (hot) and offline (cold) wallets. He’s treating this as a total compromise, and has warned that his PGP key should be suspect as well. That means recent releases of Bitcoin Knots should be suspect, too.
https://twitter.com/LukeDashjr/status/1609613748364509184
Tomi Engdahl says:
Chainalysis:
A look at the US government’s crypto-related sanctions strategy, the types of entities sanctioned, and the impact of the sanctions on the crypto crime ecosystem — Agencies like the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury and its equivalents …
How 2022’s Biggest Cryptocurrency Sanctions Designations Affected Crypto Crime
https://blog.chainalysis.com/reports/how-2022-crypto-sanction-designations-affected-crypto-crime/
Agencies like the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury and its equivalents in other countries implement sanctions through the targeting of countries, regimes, individuals, and entities that are considered threats to national security and foreign policy. Traditionally, sanctions enforcement relies on the cooperation of mainstream financial institutions, but some bad actors have turned to cryptocurrency to circumvent these third party intermediaries, giving policymakers and sanctioning bodies new challenges with which to grapple. However, cryptocurrency’s inherent transparency, along with the willingness of compliant cryptocurrency services — in particular, the many centralized exchanges that function as the link between crypto and fiat — have demonstrated that sanctions enforcement is possible in the crypto world.
In this section, we’ll look at how the U.S. government’s crypto-related sanctions strategy has evolved over time, examine the types of entities that it has sanctioned so far, and analyze the impact of those sanctions on the entities themselves and the wider crypto crime ecosystem.
OFAC’s cryptocurrency-related sanctions are on the rise since 2021
Sanctioned crypto-linked entities in 2022: Who they are and what they do
Here’s the breakdown of the individuals and entities with cryptocurrency nexuses sanctioned in the U.S. in 2022, along with the reason OFAC sanctioned them.
Name Reason for sanction
Lazarus Group Hacking/crypto theft on behalf of North Korean government
Ahmad Khatibi Aghada Ransomware
Amir Hossein Nikaeen Ravari Ransomware
Alex Adrianus Martinus Peijnenburg Drug trafficking
Matthew Simon Grimm Drug trafficking
Hydra Marketplace Darknet market and money laundering
Garantex Money laundering
Blender.io Money laundering
Tornado Cash Money laundering
Task Force Rusich Russian paramilitary group in Ukraine
Exploring pre and post-designation activity for three of 2022’s most notable sanctioned entities: Hydra, Garantex, and Tornado Cash
How did sanctioned entities behave post-designation? It depends.
Did sanctions affect criminal users of designated services?
Four of the entities sanctioned in 2022 were designated at least in part due to their provision of money laundering services to other criminals, such as ransomware attackers, scammers, and hackers. Those services were:
Hydra
Garantex
Blender.io (another mixer)
Tornado Cash
It follows that one goal of those sanctions would be to disrupt the criminals who relied on those services for money laundering. Did this end up happening in practice? Or, put another way, if I was a crypto criminal who relied on one (or more) of these money laundering services, did I see less revenue than expected after that service was sanctioned?
We found that illicit entities who used sanctioned services saw significant lost potential revenue across nearly every crypto crime category in the two months following the sanctioning event
Key takeaways: Impact of crypto sanctions depends on jurisdiction and technical constraints
Tomi Engdahl says:
Kate Rooney / CNBC:NEW
Coinbase plans to lay off a further ~950 employees, or ~20% of its workforce, seeking to reduce its operating expense by 25% QoQ; Coinbase laid off 18% in June
Coinbase to slash 20% of workforce in second major round of job cuts
https://www.cnbc.com/2023/01/10/coinbase-to-slash-20percent-of-workforce-in-second-major-round-of-job-cuts.html
Tomi Engdahl says:
Reed Albergotti / Semafor:
Sources: Coinbase’s internal “sentiment” tracker for media coverage showed Sam Bankman-Fried’s FTX was consistently viewed more favorably until its collapse
The media loved Sam Bankman-Fried; it hated Brian Armstrong
https://www.semafor.com/article/01/11/2023/the-media-loved-sam-bankman-fried-it-hated-brian-armstrong
Crypto exchange Coinbase has for years tracked how the company is portrayed in the press and online, and that “sentiment” measure has fluctuated depending on the price of cryptocurrencies and other factors.
One thing remained constant for years: Its competitor, FTX, the exchange founded by Sam Bankman-Fried, was a notch higher, according to people who’ve seen the analysis. (Bankman-Fried is an investor in Semafor.)
That changed only recently, when FTX collapsed dramatically and Bankman-Fried was indicted on several federal criminal charges related to allegedly stealing customer funds.
Tomi Engdahl says:
Tim Reynolds / Associated Press:
A federal judge terminates FTX’s 19-year, $135M naming rights deal with Miami-Dade County’s Heat arena, a massive undertaking involving the roof and more
Miami-Dade wins right to strip FTX name off Heat arena
https://apnews.com/article/miami-heat-nba-sports-business-basketball-d9c78982b811b183cbce3afbe4114cbd
Tomi Engdahl says:
CoinDesk:
Bankruptcy hearing: FTX has recovered $5B+, not including $425M held by the Bahamas or “illiquid cryptocurrency tokens”; FTX gave Alameda a $65B line of credit
FTX Has Recovered ‘Over $5B’ in Assets, Bankruptcy Attorney Says
https://www.coindesk.com/policy/2023/01/11/ftx-has-recovered-over-5b-in-assets-bankruptcy-attorney-says/
The announcement substantially raises the total FTX has recovered since filing for bankruptcy last year but it’s still short of what customers are owed in total.
Crypto exchange FTX has recovered more than $5 billion in different assets, not including another $425 million in crypto held by the Securities Commission of the Bahamas, a bankruptcy attorney said during a hearing Wednesday.
There’s still a sum missing in what is owed to customers and the amount is still unclear, the attorney said.
“We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities measured at petition date value. [It] just does not ascribe any value to holdings of dozens of illiquid cryptocurrency tokens, where our holdings are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token,” said Landis Rath & Cobb attorney Adam Landis on FTX’s behalf.
The announcement substantially raises the total FTX claims it holds, after the company’s new leadership said it could only find just over $1 billion on Dec. 20, 2022. The total amount FTX owes its creditors is still unclear. In initial bankruptcy filings, the company’s management checked off the box indicating a figure between $1 billion and $10 billion.
Sam Bankman-Fried instructed his lieutenant, Gary Wang, to create a “backdoor” for Alameda to borrow from FTX customers without their permission, Landis said. He added the former CEO created a line of credit worth $65 billion from the exchange to the trading arm.
“We know what Alameda did with the money. It bought planes, houses, threw parties, made political donations. It made personal loans to its founders. It sponsored the FTX Arena in Miami, a Formula One team, the League of Legends, Coachella and many other businesses, events and personalities,” Landis said.
He added that this has led to a “shortfall in value” to repay customers and creditors.
“The amount of the shortfall is not yet clear. It will depend on the size of the claims pool and our recovery efforts. But every week we come closer to completing the work necessary to estimate recoveries for the purposes of a plan of reorganization,” Landis said.
Tomi Engdahl says:
Wall Street Journal:
Sources: Alameda invested $1.1B+ in Genesis Digital, including $500M to buy the co-founders’ shares; the bitcoin miner is among FTX’s largest bankruptcy assets
Sam Bankman-Fried’s Supersized Bet: $1 Billion for a Bitcoin Miner on the Kazakh Steppe
Genesis Digital is one of the largest assets in the FTX-Alameda wreckage
https://www.wsj.com/articles/inside-sam-bankman-frieds-1-billion-bet-on-a-bitcoin-miner-on-the-kazakh-steppe-11673453716?mod=djemalertNEWS
Tomi Engdahl says:
Jacquelyn Melinek / TechCrunch:
Amazon partners with Ava Labs, which develops the Avalanche blockchain, to support Avalanche’s infrastructure and dApp ecosystem through its AWS marketplace — Amazon Web Services (AWS) has partnered with Ava Labs, the company building out layer-1 blockchain Avalanche …
AWS partners with Avalanche to scale blockchain solutions for enterprises, governments
https://techcrunch.com/2023/01/11/aws-partners-with-avalanche-to-scale-blockchain-solutions-for-enterprises-governments/
Tomi Engdahl says:
Danny Nelson / CoinDesk:
Sources: the DOJ is investigating Ian and Dylan Macalinao over Solana stablecoin exchange Saber Labs, after an exposé showed they faked a web of DeFi protocols — The investigation follows a CoinDesk exposé that showed Ian and Dylan Macalinao used a web of 11 pseudonymous identities …
Justice Department Probing Saber Labs Founders Over Solana-Based Projects: Sources
https://www.coindesk.com/business/2023/01/11/doj-said-to-probe-saber-labs-founders-over-solana-based-defi-stablecoin-projects/
The investigation follows a CoinDesk exposé that showed Ian and Dylan Macalinao used a web of 11 pseudonymous identities to build an ecosystem of interlocking financial products around Saber.
Tomi Engdahl says:
Bloomberg:NEW
Bulgarian police say London-based crypto lender Nexo’s office in Sofia was raided on Thursday, seeking information on suspected money laundering and tax crimes
Nexo Office Raided by Bulgarian Police in Wide Investigation
https://www.bloomberg.com/news/articles/2023-01-12/nexo-office-raided-by-bulgarian-police-probing-alleged-crimes
More than 300 personell take part in Bulgarian operation
Probe comes four months after US states move against Nexo
Tomi Engdahl says:
https://techcrunch.com/2023/01/10/six-crypto-investors-talk-about-defi-and-the-road-ahead-for-adoption-in-2023/
Tomi Engdahl says:
Shaurya Malwa / CoinDesk:
Shiba Inu developers plan to launch Shibarium, an Ethereum Layer 2 network, in the coming weeks, focusing on the metaverse and gaming applications — Ecosystem tokens shiba inu, leash and bone will serve as the the upcoming Ethereum-based blockchain. — Upcoming layer 2 network Shibarium …
Shiba Inu Developers Reveal First Look of Layer 2 Blockchain Shibarium
https://www.coindesk.com/tech/2023/01/16/shiba-inu-developers-reveal-first-look-of-layer-2-blockchain-shibarium/
Ecosystem tokens shiba inu, leash and bone will serve as the the upcoming Ethereum-based blockchain.
Upcoming layer 2 network Shibarium will soon join the ever-growing fray of Ethereum-based blockchains, such as Arbitum and Optimism, looking to solve the problems of scalability, speed and expense.
A beta testnet, or a blockchain that mimics real-world functioning, is expected to launch in the coming weeks.
Layer 2 refers to a set of off-chain solutions (separate blockchains) built on top of layer 1s that reduce bottlenecks with scaling and data. These bundle multiple off-chain transactions into a single layer 1 transaction, which helps reduce the data load and fees.
Tomi Engdahl says:
First Mover Americas: Bitcoin Tops $21K, Outshines S&P 500, Gold
The latest price moves in crypto markets in context for Jan. 16, 2023.
https://www.coindesk.com/markets/2023/01/16/first-mover-americas-bitcoin-tops-21k-outshines-sp-500-gold/
Bitcoin, the largest cryptocurrency by market capitalization, briefly reached the $21,000 mark for the first time since the FTX collapse in early November on Monday in early trading hours. The cryptocurrency has since retreated slightly, and is trading around $20,880. Ether also made gains over the weekend and is trading up 17% over the last seven days. While crypto assets surged on Monday, U.S. futures slipped. European stocks rose.