Category: Stablecoins

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DeFi Hackers Illegal Scams Stablecoins

Beanstalk Stablecoin Loses $182 Million in Flash Loan Exploit

An attacker has drained US$182 million from Beanstalk stablecoin protocol in a flash loan attack, the second nine-figure DeFi exploit in just a month. Beanstalk joins a growing list of Ethereum DeFi protocols to suffer multimillion-dollar breaches:

The attack on Beanstalk, a credit-based stablecoin built on Ethereum, mirrors an incident last year where PancakeBunny’s DeFi protocol suffered a US$45 million loss from the ecosystem. In the Beanstalk case, an attacker used a flash loan exploit to drain the protocol’s funds and Etherscan data shows Aave’s flash loan feature was leveraged to withdraw liquidity from the protocol. The hacker then used Uniswap to trade DAI, USDC and USDT for Ethereum.

The market for Beanstalk’s BEAN stablecoin collapsed as a result of the attack and the token was down 86 percent at the time of writing.

Native Tokens Used to Drain Funds

Beanstalk has since reported that the flash loan on Aave enabled the attacker to amass a large amount of Beanstalk’s native governance token, Stalk. Through the voting powers granted by the tokens, the attacker was then able to pass a malicious governance proposal that drained all protocol funds into a private Ethereum wallet:

Some Stolen Funds Diverted to a Ukrainian Relief Wallet

Beanstalk’s smart contracts were audited, but the audit was completed before the introduction of the flash loan vulnerability. No information has yet been forthcoming on whether funds would be reimbursed to users. According to PeckShield, the attacker appears to have donated US$250,000 of the stolen funds to a Ukrainian relief wallet.

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Facebook Social media Stablecoins

Meta (Facebook) Turns to ‘Zuck Bucks’ in Latest Virtual Currency Move

Since offloading its failed Diem stablecoin intellectual property and rebranding to Meta, Facebook is looking to introduce non-blockchain-based virtual tokens and loans as it seeks new revenue sources against a backdrop of fierce competition in the social media landscape.

Virtual Currencies Dubbed ‘Zuck Bucks’

According to a report by the Financial Times, Facebook is exploring the creation of non-blockchain-based virtual currencies which employees internally have dubbed “Zuck Bucks”. Unlike Diem, its doomed blockchain stablecoin project, Meta is said to be leaning towards in-app tokens centrally controlled by the company, much like those used in gaming apps such as the Robux currency in popular gaming platform Roblox.

The company is also considering rewards for users who contribute meaningfully on its platforms – for example, within Facebook groups you may have “social tokens” or “reputation tokens”. Instagram by contrast could have “creator coins”.

Meta Looks to New Revenue Streams

Amid declining profits and users, as well as competition from TikTok, Facebook has of late increasingly turned to other revenue streams for future growth.

In addition to creating a token economy, the US$600 billion social network behemoth is also considering traditional financial services, such as loans for small to medium-sized enterprises. Details, however, remain sparse:

We have no updates to share today. We continuously consider new product innovations for people, businesses, and creators. As a company, we are focused on building for the metaverse and that includes what payments and financial services might look like.

Spokesperson for Meta (unnamed)

Moves to introduce non-fungible tokens (NFTs) are more advanced, as founder and chief executive Mark Zuckerberg recently confirmed plans to integrate NFTs into Instagram in the “near term”.

As news broke of Facebook’s latest attempt to remain in the social media driver’s seat, Twitter was awash with criticism of both Facebook and the controversial founder himself:

At this stage, it’s too soon to tell whether these initiatives will dilute the company’s growth efforts or otherwise accelerate it towards new heights. Time will be the arbiter.

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Crypto News DeFi Stablecoins

Neutrino Dollar Stablecoin Loses Peg, Drops 15% Amid Manipulation Speculation

Neutrino Dollar (USDN), a dollar-pegged stablecoin backed by the Waves protocol, has lost over 15 percent of its value due to accusations of market manipulation.

Not So Stable After All

USDN fell to US$0.82 on April 4, dragging down a large chunk of the currency’s market capitalisation – over US$200 million from its year-to-date high of almost US$1 billion.

USDN Chart. Source: CoinGecko

USDN is an algorithmic stablecoin whose supply can expand and contract by burning or minting WAVES (Waves protocol’s native token). Along with USDN, WAVES dropped nearly 50 percent from its all-time high of roughly US$64 on March 31; it is currently trading at US$30, as per data from CoinGecko:

WAVES Chart. Source: CoinGecko

When Did It All Start?

The massive sell-off began in response to concerns of manipulation, with the crypto community calling Waves “a Ponzi scheme” on Twitter. Pseudonymous analyst 0xHamz accused the project of borrowing USDC, another stablecoin, to buy the WAVES token, artificially pumping its price over 750 percent in the past two months (significantly, it surged 70 percent following the March 28 launch of Waves Labs).

As the price of WAVES increased, so did the interest earned by stakers, with 0xHamz breaking it down as follows:

  • the protocol collateralises USDN to borrow USDC on Vires.Finance, a liquidity protocol based on the Waves blockchain;
  • buy WAVES;
  • convert the funds to USDN;
  • use the proceeds to borrow more USDC on the Vires.Finance pool; and
  • repeat.

Waves CEO Dismisses Accusations

Waves CEO Sasha Ivanov dismissed the allegations and in turn accused Alameda Research – a quantitative crypto trading firm headed by FTX’s Sam Bankman-Fried – of manipulating WAVES prices through a “hostile FUD campaign” fuelled by a “crowd of paid trolls” to ultimately trigger panic-selling:

0xHamZ also accused the project of pumping WAVES under a Russian ETH narrative, which Ivanov also dismissed, stating that neither he (Ivanov) nor the Waves team had any ties with Russia.

Peter Guo, a researcher at Hong Kong-based crypto fund Babel, noted that WAVES’ price surge coincided with Russia’s invasion of Ukraine in late February.

In response, FTX’s Bankman-Fried dismissed Ivanov’s accusation, calling it an “obvious bullshit conspiracy theory”:

After the incident, Ivanov announced that Vires.Finance would be subject to a protocol change proposal under a new DAO (Decentralised Autonomous Organisation) to protect the protocol from market manipulation:

Categories
Crypto News NFTs Stablecoins

Crypto Twitter Baffled by UK Government’s Move to Mint an NFT 

The British Treasury is to create an NFT. Minted by the Royal Mint, the digital asset will stand as a sign of the UK government’s “forward-looking approach” to cryptocurrency businesses and technology.

Notwithstanding this positive move toward crypto, the proposed NFT has garnered some confusion. As revealed in a keynote speech at this week’s Innovate Finance Global Summit, UK Secretary to Treasury John Glen stated that the government will issue an NFT by the northern summer.

Finally, I am announcing today that the Chancellor [Rishi Sunak] has asked the Royal Mint to create a non-fungible token – an NFT … to be issued by the summer, an emblem of the forward-looking approach we are determined to take … and there will be more details available very soon.

John Glen, Economic Secretary to the UK Treasury

The announcement also included the government’s vision for stablecoins and distributed ledger technologies as part of its pro-crypto strategy for the UK’s financial services industry. This bold move is supposed to help position Britain as a “global crypto-asset technology hub”.

The UK is also playing a role in the new OECD crypto-assets tax reporting framework, which aims to enhance tax transparency and hopefully restore consumer confidence in the sector by enabling a level playing field in global tax reporting.

UK Stablecoin Regulation Under Way

The government says it intends to bring new legislation to stablecoins within its regulatory regime. This means that issuers and service providers offering such products in the UK would need to follow standards set by UK authorities. According to Treasury Secretary Glen, “I can confirm that we will be legislating to bring certain stablecoins into our payments framework … creating the conditions for stablecoin issuers and service providers to operate and grow in the UK.”

Sunak says it is his ambition to make the UK a global hub for crypto and blockchain technology through close oversight of the emerging sector. “We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.”

This move by the treasury comes on the heels of Cambridge University launching its institutional crypto research group at the beginning of March.

Crypto Twitter in a Tizz

With levels of inflation in Britain hitting a three-decade high, according to The Guardian, many seem to be wondering what exactly is the purpose of the proposed NFT:

The UK government hasn’t yet provided any additional details – such as what the funds will be used for or how many NFTs will be minted – apart from the suitably vague release date:

UK authorities recently seized US$1.9 million worth of NFTs as part of an elaborate tax vision scheme. This new offering may come at a strange time but the broader move into blockchain tech could be positive for the space.

Categories
Banking Coinbase Crypto News Crypto Wallets Ethereum Gas MetaMask Payments Stablecoins

MetaMask iOS Update Allows Users to Buy Crypto Using a Credit Card

MetaMask now allows iPhone and Apple Pay users to buy crypto using a debit or credit card through its mobile application, eliminating the need to transfer Ethereum from a centralised exchange such as Coinbase into the app.

And in response to popular demand, MetaMask has also introduced the Apple Dark Mode feature, which will automatically open in the app as long as a user’s iPhone operating system has dark mode enabled.

Daily Deposit Limit of 400 USD

Users can now deploy their Visas and Mastercards stored in Apple Pay to buy ETH and deposit a daily maximum of US$400 into their wallets, thanks to the Wyre API (MetaMask uses two payment gateways, Wyre and Transak, to support debit card and credit card transactions).

Gas fees are also said to be lower, and some transactions may even be gasless if done on a private blockchain or if a project pays for the gas on the user’s behalf. (When completing an ETH purchase, MetaMask discloses that it does not profit from gas fees.)

Buy Stablecoins and Make Bank Transfers in 60+ Currencies

Via Transak, users have been able to buy stablecoins such as USDT, USDC and DAI on the Ethereum mainnet in MetaMask for some time now, but the latest update also allows them to make bank transfers and use credit/debit cards to buy crypto using more than 60 global currencies.

Exact payment methods and fees vary depending on the location. Earlier this month, OpenSea and Metamask blocked users from countries including Iran and Venezuela after both platforms cited compliance issues. It was later confirmed that Ethereum’s Infura cut off users to separatist areas in Ukraine, accidentally blocking Venezuelan users as well.

Just this week, the EU Parliament announced its intention to extend checks to cover privately managed unhosted wallets, including MetaMask, despite fears that such rules could prove unenforceable.

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Crypto News Crypto Staking Crypto.com DeFi Stablecoins

Crypto.com Slashes Interest Rates Suddenly on Crypto Staking Services

In what is a worrying precedent for investors across the board, leading exchange Crypto.com has again slashed the rate of returns it offers on token deposits.

Announced on March 26, the cut – the platform’s second this month – reduces flexible returns offered by Crypto.com on popular tokens such as Bitcoin and Ethereum to 0.5 percent from between 1.5 – 2 percent. Returns on larger amounts, particularly stablecoins, have effectively been halved to 4 percent.

The promotional face of Crypto.com, actor Matt Damon.

Crypto.com said the new rates would apply immediately, and that pre-existing deposits will not be affected. In an announcement earlier this month, the platform said its planned rate cuts would come into effect from April 4. This latest interest cut also makes returns offered by Crypto.com lower than those on other major platforms, including Celsius and BlockFi.

Backlash Swift and Considered

Users took to social media to protest the cut, especially as it came without warning. Reddit user u/wyzard135 summed up the overall reactive mood of investors with the following post:

“The backlash [Crypto.com] is facing is well-deserved. Even though its rate cut in this market condition […] is understandable, some transparency and communication [would] go a long way.

“However, can’t help but notice this is exactly what banks do; the past couple of years their interest rates have been plummeting and there’s practically no communication to customers about it. Customers will only see their interest paying continuously shrink, and will have to manually look up interest rates, only to see [them] keep falling.

It pains me to see Crypto.com stooping to this behaviour and I fear not only crypto.com but other crypto exchanges will start behaving like banks, which ironically crypto is trying to replace, once they get big enough with unchecked power.

Reddit user u/wyzard135

Stablecoin Staking Reduced from 12% to 8% on Three-Month Term

The move has also spilled over into the DeFi space, with returns on stablecoin deposits falling to around 12 percent across most platforms, after initially being as high as 20 percent. Some platforms are only offering 8 percent on a three-month term.

Crypto News Australia has published a list of the 10 best crypto staking websites to earn daily returns. At the top of the list is Zipmex Australia, and a guide to investing on the platform can be accessed here.

Second on the list is Swyftx, Australia’s top-rated exchange, which offers staking rewards for top market cap coins including Solana, Cardano and Polkadot. In total, 12 assets are available for staking through the platform with zero fees.

Last week, ANZ became the first Australian bank to mint the Australian dollar stablecoin A$DC.

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Bitcoin Markets Stablecoins Terra

Terra’s Stablecoin UST Market Cap Rises 700% in Past 6 Months

The market capitalisation of the algorithmic stablecoin Terra (UST) has soared in comparison to its longer-running counterpart DAI. Year-to-date, UST’s market cap has increased 700 percent, while DAI’s is up 5.7 percent.

Market capitalisation of UT vs DAI. Source: Galaxy Digital Research

What is Terra?

Terra is a blockchain protocol underpinned by a suite of decentralised stablecoins, the most popular being TerraUSD, or UST, an algorithmic stablecoin that runs on its own Tendermint blockchain. The stablecoins maintain their peg via a coin called LUNA, a volatile cryptocurrency whose elasticity of supply keeps the price of the stablecoin in check.

Voted to Burn

UST trended upwards sharply over the November-December period, starting at under US$3 billion in November. The reason for the major uptake in gains came in mid-November after the Terra community voted to burn 89 million LUNA that had been accumulated in the Terra treasury in exchange for UST. According to the founder of Terra Do Kwon, US$2.7 billion had been minted in this way.

UST Now Interacts With BTC Directly

To understand how Bitcoin links with UST, the Luna Foundation Guard (LFG) announced last week that it would be buying US$10 billion worth of Bitcoin, stating that:

As an algorithmic stablecoin, UST’s peg is maintained by a series of open market operations, arbitrage incentives, and countercyclical levers within the Terra protocol to offset market forces pushing the UST peg above or below one USD. LUNA, Terra’s reserve, staking and governance asset, retains an elastic supply to help neutralise directional market pressures impacting the peg.

LFG announcement

Simply put, Bitcoin is used to restore the UST’s peg parity to the US dollar at times when there are market sell-offs.

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Australia Banking Crypto News Stablecoins

ANZ Becomes First Bank to Mint Aussie Dollar Stablecoin A$DC

Australia and New Zealand Banking Group Limited (ANZ) has concluded a historic transaction in which its newly created stablecoin pegged to the Aussie dollar has been used in a real world transaction:

A First for Australia

According to a press release, ANZ minted 30 million of A$DC using an ANZ-built Ethereum Virtual Machine (EVM)-compatible smart contract deployed through the Fireblocks platform. These coins were then transferred between the parties and later redeemed back into fiat.

ANZ worked closely with leading providers in the digital asset domain including Fireblocks, Chainalysis and OpenZeppelin to create an in-house purpose-built stablecoin smart contract.

The historic transaction was concluded between one of Australia’s best-known investment companies, the Victor Smorgon Group (VMG), and a digital asset fund manger, Zerocap. VMG wanted to invest A$30 million into Zerocap’s digital asset fund and turned to ANZ to streamline the process and reduce costs.

By using ANZ’s stablecoin, VMG managed to avoid the costly conversion of Aussie dollars into US dollars, before then buying USDC, which Zerocap uses to access cryptocurrency markets. Instead, using ANZ’s stablecoin (A$DC), it was able to buy digital assets directly, avoiding a host of friction costs in the process. In addition, the transaction took just over 10 minutes, compared to several days had the legacy financial system been used.

ANZ services lead Nigel Dobson commented that “an ANZ-issued Australian dollar stablecoin is a first and important step in enabling our customers to find a safe and secure gateway to the digital economy”.

We’re excited to continue to trial our capability and explore how this use case can be applied in other industries and customers in the future.

Nigel Dobson, ANZ services lead

Recognising the role that stablecoins play in creating efficiencies, Dobson commented further on the transaction:

Stablecoins are a new way for customers to transact and in this case was an efficient and direct way for Victor Smorgon Group to access Zerocap’s digital asset exchange and move funds across a decentralised network.

Nigel Dobson, ANZ

Zerocap co-founder and CEO Ryan McCall remarked on how his company had taken a different approach by focusing on serving institutional clients:

Most of the crypto industry has been focused on directly servicing the retail market, whereas we’ve invested from the outset in establishing the product, technology, compliance and team to properly service private and institutional clients.

Ryan McCall, Zerocap co-founder and CEO

He concluded on a bullish note, saying: “Digital assets are going mainstream; we’re thrilled to be at the forefront of driving adoption and bringing that vision to life.”

ANZ Making Bold Moves

One of the oft-repeated phrases in crypto is how Ernest Hemingway spoke of going bankrupt: “gradually, then suddenly”.

ANZ’s “gradually” moment was late last year, when it indicated that there was a “weight of money behind crypto that you can’t ignore“. No doubt this was in response to rival Commonwealth Bank’s move to become the first local bank to offer crypto trading services to its clients.

Arguably, ANZ’s “suddenly” moment came earlier this week at the Australian Blockchain Week 2022 when it announced its entrance into the world of DeFi (decentralised finance).

Coupled with its move creating its own stablecoin, it seems reasonable to conclude that ANZ has determined that in order to remain relevant in the rapidly evolving financial industry, embracing crypto is no longer optional, it’s a prerequisite.

Categories
Crypto News Stablecoins Tether

$4 Billion Hedge Fund Makes a ‘Big Short’ Bet Against Tether

Fir Tree Capital Management has its sights firmly set on shorting the stablecoin Tether amid regulatory scrutiny and fears regarding ties with the Chinese debt market. The firm will hedge an asymmetric bet that will limit the downside but if it proves correct, will be enormously profitable:

New York-based Fir Tree has over US$4 billion under management and has structured its position on Tether (USDT) as an “asymmetric trade”, which means the downside risk is small and the potential payoff is large. The fund started to explore taking a short position on USDT in July 2021, reasoning that much of the token’s US$24 billion in commercial backing is tied to Chinese real-estate developers, which are currently struggling.

Therefore, if the paper loses value, it will lead to a potential big drop in Tether’s reserves and the coin’s price. Fir Tree had previously said that betting on this decision could generate profit within 12 months.

Chinese Real-Estate Market Facing Massive Debt Issues

The entire Chinese real-estate market is facing debt of its own, led by the China Evergrande Group, whose liabilities exceeded US$300 billion as of December 2021 when it missed a payment deadline. Tether, the company, has indicated that it does not own any commercial paper linked to Evergrande, but it has been reported that Fir Tree expects some of the commercial paper it does own to lose value.

Tether’s Reserves in Question

Many have queried of late whether Tether has enough cash reserves to back itself. The stablecoin’s quarterly assurance opinion published last month showed a decrease of 21 percent in commercial paper holdings over the past quarter.

In May last year, Tether released a breakdown of its reserves for the first time since 2014, which indicated that as of March 2021, the company held almost 76 percent of the its reserves in cash or cash equivalents. In this category, commercial paper comprised the majority, with 65 percent.

Tether has previously claimed it was 100 percent cash-backed, but the breakdown of the company’s reserves showed that less than 3 percent were actually held in cash. In October, Tether faced a US$41 million fine for lying about its reserves.

Categories
Blockchain CBDCs Crypto News Stablecoins

UK’s Cambridge University Launches Crypto Institutional Research Group

Cambridge, one of the UK’s most famous and prestigious universities, is launching a research initiative focusing on digital assets, dubbed the Cambridge Digital Assets Programme (CDAP).

IMF and Global Banks to Collaborate

The Cambridge Centre for Alternative Finance (CCAF) is backing the initiative and will collaborate with 16 companies, including financial organisations such as the International Monetary Fund (IMF), leading global banks, and private organisations.

The idea behind CDAP is to bring further insights into the growing cryptocurrency industry, and debate the risks and opportunities associated with the ongoing adoption of digital assets.

CDAP will focus on three main fields:

  • blockchain infrastructure;
  • the environmental implications of cryptocurrencies; and
  • the overall use of digital assets, stablecoins and CBDCs (Central Bank Digital Currencies).

[CDAP] aims to meet the need for greater clarity by providing data-driven insights through collaborative research involving public and private sector stakeholders.

Bryan Zhang, CCAF executive director

Other notable research collaborators are British International Investment PLC, London Stock Exchange Group, Mastercard, Visa, World Bank, and the Dubai International Financial Centre.

Link to Australian Research Program

The CCAF’s initiative is similar to that of the DFCRC – Digital Finance Co-operative Research Centre, an Australian-based research program that focuses on the digital finance sector and the latest fianancial technologies. The project raised A$181 million through local industry leaders including the Reserve Bank of Australia, National Australia Bank, and the National Stock Exchange of Australia.