It’s been a rough month for the crypto sector, and it’s only the third day of August.
From cross-chain bridge hacks withdrawing hundreds of millions of dollars in customer funds to the Securities and Exchange Commission to following crypto ponzi schemes, this corner of the market just couldn’t begin.
The developments add to an already harsh year for the crypto market, which has seen massive declines as concerns about tightening monetary policy and lack of liquidity emerge.
Even insiders have a hard time keeping up with the news, so here’s a rundown of what you’ve missed since Monday.
The headquarters of the United States Securities and Exchange Commission in Washington on February 23, 2022.
Al Drago / Bloomberg via Getty Images
The Securities and Exchange Commission on Monday filed a civil complaint accusing 11 people for their role in creating and promoting an alleged crypto-focused pyramid scheme that has raised more than 300 million dollars from investors.
The plan, called Forsage, is claimed to be a decentralized smart contract platform that will allow millions of retail investors to participate in trades through smart contracts that work on the blockchain. ethereumtron and binance blockchains. The SEC alleges that for more than two years, the setup operated like a standard pyramid scheme, in which investors made profits by recruiting others into the operation.
In the SEC’s official complaint, Wall Street’s top watchdog calls Forsage a “textbook pyramid and Ponzi scheme,” in which Forsage actively promotes its smart contracts through online promotions and new investment platforms, all while not selling “any actual, consumable products.” The complaint adds that “the primary way for investors to make money from Forsage is to recruit others to the program.”
The SEC said Forsage operated a typical Ponzi scheme in which it allegedly used assets from new investors to pay previous investors.
Carolyn Welshhans, acting director of the SEC’s Crypto Assets and Networks Unit, said: “As the lawsuit alleges, Forsage is a massively deployed and heavily marketed fraudulent pyramid scheme for the investors.
Fraudsters cannot circumvent federal securities laws by focusing their plans on smart contracts and blockchain.
Forsage, through its support platform, declined to provide a method of contacting the company and was not available for comment.
Four of the eleven individuals charged by the SEC are founders of Forsage. Their current whereabouts are unknown, but they were last known to live in Russia, the Republic of Georgia and Indonesia.
The SEC has also charged three US-based promoters with endorsing Forsage on their social media platforms. They were not named in the committee’s release.
Forsage was launched in January 2020. Regulators around the world have tried to shut it down a few times. The cease and desist actions were first brought against Forsage in September 2020 by the Securities and Exchange Commission of the Philippines. In March 2021, Montana’s securities and insurance commissioner tried the same. Despite this, the defendants allegedly continued to promote the scheme while denying claims in several YouTube videos and other media.
Two of the defendants, both of whom neither admitted or denied the charges, agreed to settle the charges, subject to court approval.
The so-called blockchain bridge has become a prime target for hackers looking to exploit vulnerabilities in the world of decentralized finance.
Jakub Porzycki | NurPhoto | beautiful pictures
Cryptocurrency Startup Nomad Loses Nearly $200 Million in a devastating security exploit. Nomad is known as a “bridge” where users can transfer tokens from one blockchain to another. Hackers exploited a security flaw that allowed users to enter any value into the system and extract funds, even if there were not enough assets in Nomad’s escrow facility.
The nature of the bug means that users don’t need any programming skills to exploit it. Others caught up and deployed armies of bots to carry out mimic attacks.
“With no prior programming experience, any user can clone call data,” said Victor Young, founder and chief architect of crypto startup Analog. the attacker’s original transaction and replace the address with their own to mine the protocol.
“Unlike previous attacks, the Nomad hack became a free attack as many users started destroying the network by just replaying the attackers’ original transaction call data. “
Blockchain bridges are a popular way to move tokens out of networks like Ethereum, which are notorious for slow transaction times and high fees, into cheaper, more efficient blockchains. But sloppy programming choices have made them prime targets for hackers looking to defraud millions of investors. According to blockchain analytics firm Elliptic, more than $1 billion in cryptocurrencies have been lost to bridge mining by 2022.
Adrian Hetman, chief technology officer at Web3 security firm Immunefi, told CNBC: “I can only hope that developers and projects will know that they are running some important piece of software.
“They need to keep security first in every business decision because they are dealing with people’s money a lot of money is locked in those contracts.”
Nomad said it is working with crypto security firm TRM Labs and law enforcement to track the movement of funds, identify the perpetrators behind the attack, and return the beaten tokens. stealing for users.
“Nomad is committed to updating its community as they learn more in the coming hours and days, and appreciates everyone who acted quickly to protect the fund,” the company said in the statement.
Michael Saylor, president and CEO of MicroStrategy, first got into bitcoin in 2020, when he decided to start adding the cryptocurrency to MicroStrategy’s balance sheet as part of its management strategy. unofficial treasury.
Eva Marie Uzcategui | Bloomberg | beautiful pictures
Then on Tuesday, MicroStrategy announces CEO Michael Saylor will be leaving his role became the Executive Chairman of the company. The company’s president, Phong Le, will take over from Saylor.
Saylor has been the CEO since he founded the company in 1989. MicroStrategy went public in 1998.
Shares of MicroStrategy are down more than 48% this year. Bitcoin down more than 51% during the same time period.
“I believe that separating the roles of Chairman and CEO will allow us to better pursue our two corporate strategies of buying and holding bitcoin and growing our enterprise analytics software business. As Executive Chairman, I will be able to focus more on my bitcoin acquisition strategy, Saylor said in the release of bitcoin-related advocacy initiatives, while Phong will be empowered as CEO to manage the overall operations of the company.
The announcement came as the company announced second-quarter results, where total revenue fell 2.6% from a year ago. The company also reported a $918 million loss charge against the value of its digital assets, presumably primarily bitcoin.
Technically, MicroStrategy may be in the business of enterprise software and cloud-based services, but Saylor says the publicly traded company doubles as the first and only bitcoin US spot exchange-traded funds
“We are like your nonexistent spot ETF,” Saylor told CNBC on the sidelines of the Bitcoin 2022 conference in Miami in April.
The Solana logo shows up on a phone screen and a representation of the cryptocurrency is seen in this illustration photo taken in Krakow, Poland on August 21, 2021.
Jakub Porzycki | NurPhoto | beautiful pictures
And then on Tuesday night, unknown attackers arrived after hot wallets were connected to the solana blockchain.
Nearly 8,000 digital wallets were withdrawn just over $5.2 million in digital currency including solanasol token of and Money USD (USDC), according to blockchain analytics firm Elliptic. Twitter account Solana Status confirmed the attack, noting that as of Wednesday morning, about 7,767 wallets had been affected by the exploit. Elliptic’s estimate is slightly higher with 7,936 wallets.
SolanaSol’s token, one of the largest cryptocurrencies after bitcoin and ether, fell about 8% in the first two hours after the hack was initially discovered, according to data from CoinMarketCap. It is currently down about 1%, while trading volume increased by about 105% in the last 24 hours.
Starting Tuesday night, many users began reporting that assets held in “hot” wallets – i.e. internet-connected addresses, including Phantom, Slope, and Trust Wallet – had run out of funds. .
Phantom mentioned above Twitter that it is investigating a “reported vulnerability in the solana ecosystem” and does not believe it is a Phantom-specific issue. Blockchain audit firm OtterSec tweeted that The attack affected multiple wallets “on multiple platforms.”
Elliptic chief scientist Tom Robinson told CNBC that the root cause of the breach is still unclear, but “it appears to be due to a vulnerability in certain wallet software, not in the solana blockchain itself. ” OtterSec added that the transactions were signed by the real owners, “suggesting some sort of private key compromise.” A private key is a secure code that grants owners access to their crypto assets.
The identity of the attacker, as well as the root cause of the exploit, is still unknown. Violation is in progress.
“Engineers from multiple ecosystems, with the help of several security companies, are investigating depleted wallets on solana,” according to Solana Statusa Twitter account that shares updates to the entire solana network.
The solana network is strongly encouraging users to use hardware wallets, as there is no evidence that they are affected.
“Do not reuse your seed phrase on hardware wallets – create a new seed phrase. Drained wallets must be considered compromised and abandoned” read a tweet. The seed phrase is a set of random words generated by the crypto wallet when it is first set up and it grants access to the wallet.
The private key is unique and associates the user with their blockchain address. The seed phrase is the fingerprint of all the user’s blockchain assets to be used as a backup if the crypto wallet is lost.
The Solana network is considered one of the most promising newcomers in the crypto market, with backers like Chamath Palihapitiya and Andreessen Horowitz touting it as an ethereum challenger with faster transaction processing times. and enhanced security. But it has been facing a lot of issues lately, including downtime during active periods and the perception of being more centralized than ethereum.