Author: Jana Serfontein

Jana has keen interest in what cryptocurrencies have to offer in regards to NGO’s, governments and the financial system. And is also intrigued with the psychological effect that cryptocurrencies have on society.

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Crypto News Cryptocurrency Law Illegal NFTs Regulation Scams

US Senator Proposes Laws to Make Rug Pulls a Crime

Under new legislation filed in the US state of New York, lawmakers intend to confirm fraudulent rug pulls as a crime along with other crypto-specific forms of duplicity.

Companion Bill Filed in Lower Chamber

According to public records, Senate Bill S8839 “establishes the offences of virtual token fraud, illegal rug pulls, private key fraud and fraudulent failure to disclose an interest in virtual tokens”. A companion bill, Assembly Bill A8820, was also filed in the New York State Legislature’s lower chamber. The bills were introduced by State Senator Kevin Thomas and Assembly member Clyde Vanel, respectively.

The legislation places particular focus on rug pulls – a term referring to the sudden exit of a developer or founding team and the resultant defrauding of investors – given how prevalent the practice is in the crypto space. The framed New York legislation proposes limits on the ability of founding teams to sell significant percentages of their token holdings within a period of five years.

The specific text of the proposed legislation reads:

Illegal rug pulls:

1. A developer, whether natural or otherwise, is guilty of illegal rug pulls when such developer develops a class of virtual token and sells more than ten percent of such tokens within five years from the date of the last sale of such tokens.

2. This section shall not apply to non-fungible tokens (NFTs) where a developer has created less than 100 NFTs that are regarded as part of the same series or class of NFTs or where such NFTs regarded as part of the same series or class are valued at less than $20,000 at the time the rug pull occurs.

Proposed New York rug pull legislation

If the legislation is approved and signed, it will take effect 30 days after passage.

Need for Legislation Parallels the Rise of Rug Pulls

Legislation such as this is becoming all the more necessary given the rising incidence of rug pulls and crypto scams. Last year Crypto News Australia reported on a Solana NFT project that was accused of a rug pull of the coin Eternal Beings. And in December, Bent Finance confirmed that its pool had been exploited for US$1.6 million in a rug pull incident.

Categories
Coinbase Ethereum NFTs

Coinbase COIN Hits All-Time Low, Down 63% Since IPO

Coinbase stock has hit an all-time low just two days after it launched its Ethereum NFT marketplace. Since the launch, shares are down more than 15 percent and the price has dropped more than 47 percent since January.

Coinbase Plummets Despite New Developments

Coinbase shares on the Nasdaq slid down to US$131.14 hours after trading on April 22. The crypto exchange announced its plans to enter the NFT space in October last year, with over 1.5 million people signing up for the waitlist, and the beta version of the marketplace kicked off on April 20.

The launch, which had been hyped for over a year, failed to reverse Coinbase’s months-long slump, with the price almost halving since January.

Further Integration Planned Despite Lukewarm Reception

While everybody can access the website at the moment, with the beta launch only a select few clients can buy and sell Ethereum-based NFTs with payments in Ether. Coinbase plans to integrate other blockchains in the future along with unique features that would allow users to engage more. For now, though, it seems that Coinbase’s NFT marketplace has failed to generate much excitement despite entering a burgeoning space populated by other marketplaces such as OpenSea, Rarible, SuperRare and LooksRare.

What differentiates Coinbase’s marketplace from those of its competitors is that it emphasises communal experience, encouraging NFT artists and buyers to interact and connect with social features, much like Instagram. The platform, which has aggregated any NFTs for sale on the Ethereum blockchain across marketplaces, is still limited in terms of access and is slowly opening to its millions-long waitlist.

The downturn in prices comes at a bad time for Coinbase. The launch of its marketplace was initially planned for late 2021 and it has entered the red-hot NFT space just as it seems to be cooling down. Along with the price slump, Coinbase is also being dragged into a class action lawsuit for selling 79 “unregistered securities”.

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Crypto News Hackers Illegal Scams

Hacker Exploits DeFi Protocol ‘Zeed’ for $1 Million But Fails to Take the Funds

After the decentralised finance (DeFi) protocol ‘Zeed’ was exploited for US$1 million this week, the hacker destroyed the contract used but left all tokens, rendering them immobile:

Zeed is a lesser-known DeFi protocol, an “autonomous decentralised integrated ecosystem” that runs off the BNB Chain. The protocol was attacked by minting extra rewards that were sold on the market, thereby crashing the token’s price to zero:

After the attack, the hacker destroyed the contract used in the exploit, meaning that any tokens held by the contract could no longer be moved, according to PeckShield, who put it in a nutshell: “The hacker kills the contract, but forgets to transfer the profit.”

Another blockchain security firm, BlockSec, added: “Interestingly, the attacker does not transfer the obtained tokens out before self-destructing the attack contract. Probably, he/she was too excited.”

Yet Another DeFi Hack

Hacks are becoming an increasingly common occurrence in the DeFi space. Last year, DeFi project Cream Finance lost US$19 million in a flash loan attack – its second breach in six months. Earlier this week, Crypto News Australia reported that the Beanstalk stablecoin lost about US$182 million in yet another flash loan exploit.

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Bitcoin Crypto News Ripple

Ripple CEO Hits Out at Bitcoin Maximalists

Ripple CEO Brad Garlinghouse has said that bitcoin “tribalism”, or what he calls bitcoin maximalism, is inhibiting the entire cryptocurrency industry and has led to “fractured representation” when it comes to lobbying US lawmakers.

Garlinghouse also said that he finds the lack of coordination in Washington DC within the crypto industry “shocking”:

Bitcoin Maximalism Stifling Industry Growth

In an interview with CNBC, Garlinghouse said he owns multiple cryptocurrencies and expects them all to rise together as the overall industry grows:

I own Bitcoin, I own Ether, I own some others. I am an absolute believer that this industry is going to continue to thrive … All boats can rise.

Brad Garlinghouse, CEO, Ripple

While speaking out about his concerns, Garlinghouse compared the crypto market to the rise of the internet giants decades ago, saying: “Yahoo could be successful and so could eBay … They’re solving different problems … There [are] different use cases and different audiences and different markets. I think a lot of those parallels exist today.”

What Garlinghouse calls “bitcoin maximalists” refers to people who view one coin – in this case, bitcoin – as the currency that rules all others. According to this point of view, in the case of cryptocurrencies, it is that one asset that presents an outsized reward compared to others, causing what Garlinghouse calls “fractured representation”.

Ripple is still dealing with a lawsuit brought on by the US Securities and Exchange Commission (SEC) for allegedly issuing XRP, Ripple’s native coin, as an unregistered security. In February, some good news regarding the suit allowed XRP to soar 50 percent.

So-called “Bitcoin maximalists” have taken to Twitter to express their views:

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Crypto News Monero Privacy

Monero (XMR) Rallies Amid Plans of Hard Fork in July

Privacy-focused protocol Monero is set to undergo a hard fork in July which would improve network security and fee changes, according to an announcement on GitHub. A testnet is set to be deployed next month.

Monero says the proposed hard fork would see version 15 of the privacy-focused coin launched with several upgrades for improved security. Since the announcement, its native coin XMR has rallied 11 percent. No separate coin will be issued after the hard fork at a block height of 2,668,888 expected in July. (Hard forks refer to a change to a blockchain protocol that would render the one previous to it invalid.)

The Monero protocol masks the wallet addresses of users, making it difficult to trace and track transaction behaviour.

What Happens After V15?

The hard fork set for July will usher in software iteration V15, with two previous versions going live in 2020 that introduced marginal upgrades. V15 will see an increase in Monero’s ring size from 11 to 16, along with fixes to its multi-signature mechanism.

Multisignature refers to a transaction that needs multiple signatures before it can be submitted to the network and executed, with ring size referring to the total number of signers in a ring signature. A ring signature is a form of digital signature in which a group of possible signers is merged to produce a single and distinctive signature that can authorise a transaction.

V15 will also introduce a “bulletproof+”, an upgrade to the bulletproof technology deployed on Monero in 2018 that ensures the information stored within a confidential transaction does not contain any false data.

News of the hard fork is welcome, considering the trouble Monero faced earlier in the year. The protocol’s biggest mining pool, MineXMR, approached 51 percent of the hashrate, which raised some serious alarms.

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Crypto News Decred Ethereum Zcash

Decred (DCR) Token Soars 45% in a Day Following Imminent Shift to Proof-of-Stake

Under-the-radar altcoin Decred (DCR) has defied the odds by soaring 45 percent in less than a day as the overall crypto market saw only red.

As most digital assets have undergone downward price action, DCR has confounded market conditions. The upsurge in price is mostly due to the protocol moving from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.

When blocks are mined on the DCR, a portion of the fees goes to PoW miners while the stake voters also get a cut. A third, smaller portion goes to a Project Treasury fund, which is used to develop the protocol. But recently the community voted to change its current model.

PoS to Weed Out Malicious Actors

The community voted on a proposal to reduce the PoW mining rewards from 60 percent down to 10 percent in order to defend against “malicious miners” with a history of price manipulation. The community also agreed to raise the rewards for Decred’s PoS validators from 30 percent to 80 percent, suggesting that consensus wants to move away from PoW to PoS.

This simply means that Decred users would be incentivised for locking up their DCR for a certain amount of time, thereby reducing their active supply from the market, which could bolster the price:

Jake Yocom-Piatt, project lead for Decred, tweeted the motivation behind the update:

A hidden risk we found with Decred’s PoW is that a malicious mining cartel can, instead of selling at market prices, accumulate a vast inventory of coins, which can then be wielded as a weapon against positive price action. While this risk has been exposed specifically with Decred, a similar strategy has likely been applied for every notable majority-PoW coin. People who care about PoW and its fairness should be aware of this hidden risk.

Jake Yocom-Piatt, project lead, Decred

Many Protocols Move to PoS

Protocols that have announced a move to a PoS consensus have subsequently surged in value. Last year, Zcash soared 30 percent when it announced its move to PoS. Ethereum also recently flagged a move to PoS but its so-called ‘Merge’ has been delayed until Q3 of 2022.

Categories
Australia Crypto News Regulation

Australian Blockchain Start-Up ‘Lygon’ Secures $12.75 Million from Major Banks

‘Lygon‘, a blockchain start-up created as a joint venture between three of Australia’s ‘Big Four’ banks, IBM, and retail conglomerate the Scentre Group, has secured an additional A$12.75 million in its latest round of funding.

Lygon, the creator of the world’s first digital bank guarantee, was founded after its corporate partners realised they needed to collaborate to solve a problem that has caused significant inefficiencies over decades: 200-year-old paper bank-based guarantees.

Process Reduced From a Month to a Day

Guarantees are common commercial contracts in which banks vouch that a customer is able to repay a debt, and they are still regularly used in the commercial property industry. Lygon suggests that it has turned the “paper-based, slow and costly” process into digital form and can thus reduce the time it takes to issue a bank guarantee from one month to one day.

According to Lygon chairman Nigel Dobson, “The commercialisation of the Lygon platform represents a significant milestone for blockchain technology in Australia and globally.” He added:

We’ve gone from a proof-of-concept to a newly incorporated company and commercially available platform in two years – at a time when the demand for digital has never been stronger.

Nigel Dobson, chairman, Lygon

Traditional Guarantees Eat Up 80,000 Courier Deliveries and Four Tonnes of Paper Annually

The paper-based nature of guarantees slows down processing, causing logistical problems for companies such as Scentre, and Lygon has estimated that bank guarantees currently require 80,000 courier deliveries each year and use four tonnes of paper.

Based on IBM’s Hyperledger technology, the Lygon innovation will allow ANZ, Westpac and the Commonwealth Bank to store their instruments on one platform that can be accessed by multiple users.

Lygon’s Capital Pushes It into New Sectors

Lygon originally set out to raise A$10 million, but chief executive Justin Amos said it increased the capital target due to higher than expected demand from backers. The extra funding will be used to hire more staff (at least 30 more this year), fund research and development work, and push into new industries such as insurance and environmental, social and governance.

Lygon is also working on digitising rehabilitation bonds, commonly used in the mining sector and designed to ensure government has funds to restore a mine, exploration site or quarry if an operator fails.

According to Amos, “We have a built, fit-for-purpose bank guarantee platform, but our customers are coming to us and saying they want us to do more.” He added:

[The Lygon innovation is] a game-changer from a customer experience perspective. In terms of [traditional] bank guarantees, they were paper-based systems that are not good for anyone. They’re expensive, prone to delay, and there is operational fraud everywhere.

Justin Amos, CEO, Lygon

Australian Banking Industry Needs to Back Blockchain

As interest in cryptocurrencies and blockchain technology surges in Australia and the world over, the crypto community fears that outdated regulations may prevent businesses and investors from getting involved. Recently, the Australian Prudential Authority revealed it was in the final stages of drafting a letter to the country’s financial institutions that will outline its expectations for the future of digital assets.

Categories
Crypto News NFTs Payments

Amazon CEO Bullish on NFTs, Less So on Crypto Payments

Amazon CEO Andy Jassy has revealed that the e-commerce giant does not have any plans of integrating cryptocurrency payments, though it is considering adding non-fungible tokens (NFTs) to its retail business, according to an interview with CNBC.

While admitting he does not personally own bitcoin or NFTs, Jassy said he was optimistic about the future of cryptocurrencies and NFTs in particular.

On the subject of Amazon’s plans for crypto integration, he said:

We’re not probably close to adding crypto as a payment mechanism in our retail business, but I do believe over time that you’ll see crypto become bigger.

Andy Jassy, CEO, Amazon

Outcomes So Far Fail to Match Intentions

Amazon has in the past spoken of its interest in cryptocurrencies when rumours were circulating that the digital behemoth would be accepting bitcoin as payment by the end of 2021. The possibility of a native token was also a topic of discussion at the time. Amazon even went as far as hiring blockchain experts to expand its reach into DeFi.

Amazon CEO Andy Jassy. Source: the verge.com

Jassy also told CNBC that he expected NFTs would continue to grow significantly and that he could envision a future where Amazon sells NFTs: “I think it’s possible down the road on the platform,” Jassy noted after replacing  Jeff Bezos as CEO of Amazon last year. Jassy had previously led Amazon Web Services since its inception last year.

Asked whether he personally owns cryptocurrencies, Jassy disclosed: “I don’t have bitcoin myself.”

Categories
DeFi Illegal Privacy Scams Tornado Cash

ETH Privacy Tool Tornado Cash Starts Blocking Sanctioned Addresses

Tornado Cash is apparently using Chainalysis oracles to block access from US Office of Foreign Assets Control (OFAC) addresses. The blockade only applies to the Tornado front-end, not the underlying smart contract:

As a fully decentralised protocol for private transactions of Ethereum, Tornado Cash last year announced it would be integrating with Arbitrum, the layer-2 solution that leverages optimistic rollups for Ethereum dApps.

Maintaining financial privacy is essential to preserving our freedom, [though] it should not come at the cost of non-compliance.

Tornado Cash

Tornado Cash works by “breaking the on-chain link between source and destination addresses”. Deposits go into a smart contract, where they are mixed around with others, and can then be withdrawn by a new address, making it more private.

The Chainalysis oracle is a smart contract that works on Ethereum and several other networks, including Avalanche, BNB Smart Chain, and sidechain and layer-two networks such as Polygon and Optimism. Simply put, Tornado Cash is a piece of code that scans crypto addresses and determines whether they are subject to sanctions from the US or other governments, and if so, the wallet is blocked.  

Tornado Cash Facilitates Hackers

Earlier this month, Inverse Finance, a decentralised lending protocol built on Ethereum, lost over US$15 million in a DeFi hack. Hackers were able to take out massive loans and get away with it through Tornado Cash.

Categories
Hackers Illegal NFTs Rarible Scams

2 Million Users’ NFTs at Risk After Security Firm Identifies Flaw in Rarible

Cyber security software firm Check Point Research (CPR) has identified a vulnerability in NFT marketplace Rarible that could have seen any of its 2 million monthly users lose their NFTs in a single transaction.

Attackers Could Have Gained Full Access

CPR has previously identified exploits, among them the infamous hack of OpenSea in October 2021. According to CPR:

CPR identified a security flaw in Rarible, the NFT marketplace with over two million active users. If exploited, the vulnerability would have enabled a threat actor to steal a user’s NFTs and crypto tokens in a single transaction. CPR immediately disclosed findings to Rarible, who acknowledged the security flaw. CPR’s revelations mark the second time that their researchers discovered security flaws in an NFT marketplace. In October 2021, CPR found security issues in OpenSea, the world’s largest NFT marketplace.

Check Point Research

According to CPR, the exploit would have occurred when a malicious NFT within Rarible’s marketplace itself, where users are less suspicious and familiar with submitting transactions, and the exploit would have begun with the victim receiving a link to a malicious NFT who then clicks on it.

Attack Methodology

CPR has provided outlines of the attack methodology:

  • Victims receive a link to the malicious NFT or browse the marketplace and click on it.
  • The malicious NFT executes JavaScript code and attempts to send a setApprovalForAll request to the victim.
  • The victim submits the request and grants full access to the NFTs/crypto tokens to the attacker.

CPR immediately disclosed the findings to Rarible, which has since acknowledged the security flaw and taken action against the attack.

NFT Thefts Rampant

Earlier this year, Crypto News Australia reported a flaw on multibillion-dollar GameFi company Illuvium that caused it to drain its liquidity pools. Had it not done so, the flaw could have ended in billions of dollars lost due to the flaw.