Cryptospace Spotlight 2022 #12 (20 Mar 2022)
EU voted not to ban PoW, USD14 millions exploited through DeFi, and Vitalik worries about crypto's future!
Technology and Industry
Ethereum creator Vitalik Buterin is worried about crypto's future. “Crypto itself has a lot of dystopian potential if implemented wrong,” the Russian-born Canadian explains the morning after the party in an 80-minute interview in his hotel room. [more]
Buterin worries about the dangers to overeager investors, the soaring transaction fees, and the shameless displays of wealth that have come to dominate public perception of crypto.
“The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” he says, referring to the Bored Ape Yacht Club, an überpopular NFT collection of garish primate cartoons that has become a digital-age status symbol for millionaires including Jimmy Fallon and Paris Hilton, and which have traded for more than $1 million a pop.
“Singapore-based” Heritage DAO had bought a South Korean national treasure, a miniature gilt-bronze shrine, for an undisclosed figure. It had promptly donated 51% of the item’s ownership to the museum, where it will now be permanently displayed in its “physical form.” [more]
Blockchain start-up ConsenSys has raised $450 million in a new round of funding that more than doubles its valuation to $7 billion. The cash injection was led by ParaFi Capital, with Microsoft, Japan’s SoftBank, and Singapore’s Temasek joining as new investors in the company. [more]
New York-headquartered ConsenSys was founded in 2014 by Joseph Lubin, a co-founder of Ethereum. MetaMask is one of its products.
HSBC enters the metaverse through The Sandbox. [more]
HSBC will buy a plot of land at The Sandbox metaverse, which it will develop to engage with sports, e-sports and gaming fans.
Previously, JP Morgan was the first bank that enters Decentraland metaverse and build its lounge
Piyush Gupta, the CEO of DBS Bank, believes that cryptocurrencies can be an alternative to gold and its role in the current financial system. However, he doesn’t think digital assets can become “money as we know it.” [more]
Major cryptocurrency exchanges licensed in Middle East -
FTX has been granted a license to operate within the United Arab Emirates (UAE) and will now seek to establish a regional headquarters within the city of Dubai [more].
Binance was granted a virtual asset license by Dubai’s regulator as the crypto exchange seeks to expand further in the United Arab Emirates (UAE) [more].
Elliptic claims capability in search for Russian crypto sanctions evaders, noting that crypto is traceable and can be de-anonymised. [more]
In Europe, EU Committee has voted against the implementation of a controversial clause that effectively ban proof-of-work coins, including bitcoin.[more]
In United States, Sen. Elizabeth Warren revealed a new bill, co-sponsored by 10 other senators, aiming to prevent crypto companies from doing business with sanctioned entities. The Digital Assets Sanctions Compliance Enhancement Act, introduced during a Senate hearing on the role of digital assets in illicit finance, would allow secondary sanctions on those that transact with sanctioned individuals, companies or governments. It would apply to any sanctions imposed by the US. [more]
Interestingly, Chainalysis Co-founder pointed out that anonymity is hard to achieve even with crypto mixing services [more]
In Australia, Australian Competition and Consumer Commission (ACCC) has instituted federal court proceedings against Meta Platforms (formerly Facebook) over scam crypto ads. [more]
Facebook parent Meta knowingly published crypto ads designed to scam users by leveraging well-known public figures, the ACCC said
Ukraine has passed its law “on virtual assets,” paving the way for a legal crypto market. [more]
The newly formed market is to be overseen by the National Securities and Stock Market Commission. The regulator is now tasked with implementing state policy as it relates to digital assets, issuing licenses and supervision, among other responsibilities.
The Chinese judiciary is about to hear its first-ever case involving digital yuan fraud. [more]
Cyberpolice in Jiangxi Province have arrested and charged a man surnamed Wang (aged 24). He was accused of posing as a public prosecutor and duping a female victim in Xinyu into sending him “hundreds of thousands of CNY” in digital form in October last year.
15 Mar - DeFi Deus Finance was exploited. The attacker stole 200,000 DAO and 1101.8 ETH – or around $3 million worth of digital assets. However, security firm PeckShield warned that the losses for Deus Finance could be even worse. [more]
PeckShield said attacker manipulated prices on Deus’s offerings using a flash loan, a form of uncollateralized lending using smart contracts.
Attacker used flash loans to manipulate the contract that determined the price of DEI – one of the two tokens issued by Deus Finance – to falsely show that DEI had collapsed. This led to a loss of all funds of the users supplying liquidity to the DEI/USDC pool.
Blockchain data shows that over 3 million USDC tokens were stolen from Deus which was exchanged for 200,000 DAI and 1,101.8 ether (ETH) via decentralized exchange Multichain.
The attacker funneled the funds to the cryptocurrency mixer TornadoCash through Multichain (previously Anyswap).
15 Mar - DeFi Agave and Hundred Finance were exploited for $11 millions on the Gnosis chain. [more]
The attacker has made off with approximately $11 million in wrapped ETH (wETH), wrapped BTC (wBTC), Chainlink (LINK), USD Coin (USDC), Gnosis (GNO) and wrapped XDAI (wxDAI) after using a “re-entrancy” attack on DeFi lending protocols Agave and Hundred Finance.
Reentrancy is a Solidity programming language vulnerability that allows an attacker to trick a protocol’s contract into making an external call to an untrusted contract. Once this happens, the hacker can then use this untrusted contract to make repeated calls to the protocol to drain its funds.
Reentrancy attack in layman terms [Ref: http://twitter.com/aliatiia_/status/1251997020769878016?s=19]
Zorro goes to bank Branch #1:
1. Zorro: I'd like to withdraw my entire balance in cash.
2. Teller Alice: sure, here you go.
3. Zorro mysteriously vanishes. "What da? where did he go?" wonders Teller Alice.
4. "Ah well", Teller Alice mumbles to herself and proceeds to click "Finish transaction" on her computer in order to finalize Zorro's withdrawal transaction.
This should result in Zorro's balance updated to zero, as it should since, you know, he disappeared with the cash.
5. But a pop-up message appears on Teller Alice's computer: "Failed to finalize transaction because this account (Zorro's) is currently being used by another teller at another branch".
Turned out, after getting the cash from Teller Alice, Zorro used his superpowers to travel, at the speed of light, to Branch #2:
6. Zorro: I want to withdraw my entire balance
7. Teller Bob: sure, here you go.
8. Zorro mysteriously vanishes, "what da? where did he go?" says Bob
9. "Ah well", Bob mumbles to himself, and proceeds to click "Finish transaction" on his computer in order to finalize Zorro's withdrawal and hence updating his balance to zero.
10. A pop-up message: "Failed to finalize transaction, account (Zorro's) being used at another branch"
Turned out, in step 3, Zorro used her superpowers to travel, *YET AGAIN*, at the speed of light, to Branch #3:
11. Zorro: I want to withdraw my entire balance.
12. Teller Charlie: sure, here you go
*The cycle continues*
Each branch, the teller hands money over to Zorro because his balance never gets updated to zero by the preceding teller.
Each teller is waiting for the account to be released so they can successfully click "Finalize Transaction" and make the update.
Zorro just keeps speed-light traveling from one branch to another, taking and accumulating the cash with him, till he drains the whole bank of all its money in all branches.